Despite ongoing geopolitical and economic uncertainties, May 2024 was a dynamic month for global financial markets, with significant gains across most major indices.
This report provides a detailed analysis of market performances across different regions, highlighting key trends, economic indicators, and notable movements in various asset classes.
LOCAL MARKET HIGHLIGHTS
In South Africa, the Johannesburg Stock Exchange (JSE) maintained its momentum for most of May from March to April. Still, concerns over potential coalition government formations involving the ANC and populist parties impacted investor sentiment
South Africa’s April headline CPI slowed to 5.2% year-on-year, continuing the downward trend from March’s 5.3%. The South African Reserve Bank kept the repo rate on hold at 8.25% at its third Monetary Policy Committee meeting of the year.
The FTSE JSE All Share Index gained 0.8% for May. Industrial counters, especially rand-hedges, saw gains in May, with Richemont (+12.7%), Prosus (+5.8%), and Naspers (+3.4%) delivering positive growth.
On the other hand, financial and property indices fell, with the SA Listed Property Index down 0.4% and the Fini-15 down 0.7%. South Africa’s April headline CPI slowed to 5.2% year-on-year, continuing March’s downward trend from 5.3%.
Exhibit 1 | Main equity indices
Source: Bloomberg. RMB Markets. Data as of 31 May 2024. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.
GLOBAL MARKET HIGHLIGHTS
Global markets recorded robust performances in May, with the MSCI World Index rising by 4.5% month-on-month. This surge was driven by buoyant equity markets and lower-than-expected inflation in the United States. This has subsequently raised expectations for a potential interest rate cut by the Federal Reserve in September 2024. The easing inflation suggested a downward trend, boosting financial market optimism.
Commodities
Commodity prices experienced varied movements. Gold continued its upward trend, increasing by 1.8% for May and marking its fourth consecutive monthly gain. Brent crude, however, fell by 7.1% for May. Platinum prices surged to 10.7% for May due to supply shortages, while palladium declined by 4.1%. Iron ore prices slipped by 0.6% for May amid fears of falling demand in China, which reiterated its stance on controlling crude steel output.
Exhibit 2 | Precious metals- spot prices
Source: Bloomberg. RMB Markets. Data as of 31 May 2024. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.
United States
United States stock markets defied the “sell in May and go away” adage. The Dow Jones Industrial Average increased by 2.3%, the S&P 500 by 4.8%, and the tech-heavy Nasdaq by 6.9% for May. Notably, the Nasdaq reached an all-time closing high on 29 May, driven by continued optimism over AI stocks, particularly Nvidia, which saw its stock rise by approximately 27% for May. United States consumer confidence improved unexpectedly, further supporting market gains.
United States economic data indicated that April headline inflation – measured by the Consumer Price Index (CPI) – rose by a less-than-expected 3.4% (year-on-year). This is a decline from March’s 3.5%. Core CPI, excluding volatile food and energy components, advanced by 3.6% year-on-year (compared to 3.8% in March).
Retail sales in April increased by 0.7% month-on-month, exceeding market expectations of a 0.4% rise, while core personal consumption expenditure (PCE) inflation, a key Fed barometer, remained steady at 2.8% year-on-year.
Exhibit 3 | US – S&P 500, Dow Jones and Nasdaq
Source: Bloomberg. RMB Markets. Data as of 31 May 2024. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.
Europe
European equity markets also closed higher in May. Germany’s DAX rose by 3.2% month-on-month, while France’s CAC gained 0.1% month-on-month.
Economic data showed stable inflation rates, with the Eurozone’s April inflation print at 2.4% (unchanged from March). Germany’s inflation remained at 2.2% year-on-year, while France’s inflation slowed to 2.2% year-on-year from 2.3% in March. Eurozone GDP grew by 0.3% quarter-on-quarter in the first quarter of 2024, reflecting modest economic expansion.
Exhibit 4 | Europe – main equity markets
Source: Bloomberg. RMB Markets. Data as of 31 May 2024. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.
United Kingdom
The United Kingdom market continued its positive trajectory, with the FTSE-100 Index rising by 1.6% for May. The index reached an all-time high of 8,445.8 in mid-May before closing the month at 8,275.38.
April inflation fell to 2.3% year-on-year from 3.2% in March, although it remained above the Bank of England’s 2% target. Core inflation, excluding energy, food, alcohol, and tobacco, dipped to 3.9% in April from 4.2% in March
Asia
In Asia, Japan’s Nikkei ended May 0.2% higher. Japan’s April headline CPI slowed to 2.5% year-on-year from 2.7% in March, aligning closer with the Bank of Japan’s 2% target. Despite stimulus measures to stabilise the property market, China’s equity market performance was mixed. The Shanghai Composite fell by 0.6% for May. Conversely, the Hang Seng rose by 1.8% in May. China’s official May Manufacturing PMI fell to 49.5 from 50.4 in April, indicating contraction amid ongoing property sector challenges.
Exhibit 5 | Asia – main equity markets
Source: Bloomberg. RMB Markets. Data as of 31 May 2024. Past performance is not a reliable guide to future performance. For illustrative purposes only and not indicative of any investment.
In conclusion
May 2024 was a month of notable gains in global markets, driven by positive economic data, strong performances in key sectors, and optimism about potential interest rate cuts.
While geopolitical risks and economic uncertainties remain, the overall market trajectory has been positive. The robust performance of equity markets (particularly in the United States and Europe) and the stabilisation efforts in Asia, highlight the global economy’s resilience. Regions like South Africa face challenges due to political developments and economic concerns. Continued vigilance and strategic investment decisions will be crucial in navigating the evolving market landscape.
