Market commentary
Stocks rise despite U.S. trade policy concerns.
Global equities rose sharply in May despite periods of volatility in response to numerous changes in trade policy.
Stocks rise despite U.S. trade policy concerns
Global equities, as measured by the MSCI ACWI Index, rose sharply in May despite periods of volatility in response to numerous changes in the trade policy of the administration of U.S. President Donald Trump. Investors ultimately focused on positive news regarding negotiations between the U.S. and several major trading partners. The U.S. broad-market S&P 500 Index and the tech-heavy Nasdaq Composite Index surged 6.3% and 9.7%, respectively, in May—their largest monthly gains since November 2023.1 Additionally, the S&P 500 Index saw its best May performance since 1990.2
Developed markets outperformed emerging markets in May. North America led the developed markets for the month attributable largely to the rally in the U.S. The Pacific ex Japan region was bolstered by strength in Singapore and New Zealand. Despite registering a positive return, Europe was the most notable developed-market laggard in May due to relative weakness in Switzerland, Belgium, and France. The Far East was the top performer within the emerging markets for the month, benefiting mainly from robust performance in Taiwan and Indonesia. Chinese and Hong Kong stocks listed on the Hong Kong Stock Exchange also performed well. In contrast, the Gulf Cooperation Council (GCC) countries recorded negative returns for the month and were the worst performers in the emerging markets due mainly to weakness in Saudi Arabia.3
Global fixed-income assets, as measured by the Bloomberg Global Aggregate Bond Index, dipped 0.4% (in U.S. dollars) in May. High-yield bonds comprised the lone sector within the U.S. fixed-income market to finish the month in positive territory, while investment-grade corporate bonds posted virtually flat returns. U.S. Treasury securities and mortgage-backed securities (MBS) recorded losses in May. U.S. Treasury yields rose for all maturities of three months or longer. Yields on 2-, 3-, 5-, and 10-year Treasury notes increased by corresponding margins of 0.29%, 0.29%, 0.24%, and 0.24% to 3.89%, 3.87%, 3.96%, and 4.41%, respectively.4 The Treasury yield curve turned positive (10-year yields exceeded 3-month yields) over the month.
Global commodity prices, as represented by the Bloomberg Commodity Index, were down 0.6% in May. The West Texas Intermediate (WTI) and Brent crude oil prices rose 4.4% and 4.7%, respectively, during the month amid optimism that an agreement between the U.S. and China, the world’s two largest oil consumers, to delay and reduce tariffs on imported goods could boost demand. The gold price retreated somewhat from its recent record highs, ending the month with a 0.1% dip as the postponement of U.S. tariffs on China and, later in the month, the European Union (EU), eased investors’ demand for safe-haven assets. The the New York Mercantile Exchange (NYMEX) natural gas price fell 5.2% due to a decline in demand and increasing stockpiles in the U.S. The 0.6% upturn in the wheat price resulted mainly from forecasts that unusually warm summer temperatures and extreme weather could reduce stockpiles in North America, Asia, and Europe.
1 Source: Nasdaq. “May 2025 Review and Outlook.” May 31, 2025.
2 Source: MarketWatch. “S&P 500 scores best May since 1990, but stocks end month with fresh tariff worries.” May 30, 2025.
3 All equity market performance statements are based on the MSCI ACWI Index.
4 According to the U.S. Department of the Treasury. As of April 30, 2025.
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