May proved to be a month of mixed performances for global markets as volatility persisted due to ongoing trade tensions and inflationary concerns. Despite these challenges, some markets saw modest gains. Developed markets experienced fluctuations throughout the month, with the MSCI World Index showing restrained movements as investors balanced optimism from strong corporate earnings against uncertainties stemming from escalating tariff conflicts. Emerging markets continued to benefit from improved investor sentiment and commodity price stability, helping sustain moderate gains. South Africa’s economy showed resilience amidst global uncertainty. The Rand strengthened to levels last seen in December. Inflation increased slightly to 2.8%. Global economic outlooks remain cautiously optimistic.
LOCAL MARKETS
Exhibit 1 | Local Performance (ZAR) for May 2025
Source: Factset. Data as at 31 May 2025. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.
South Africa
Economy
In May, the South African rand experienced fluctuations, reaching a five-month high of R17.85 against the U.S. dollar on 26 May before slightly weakening to R17.92 by 27 May. This volatility was influenced by global risk sentiment and anticipation of the South African Reserve Bank’s (SARB) interest rate decision. The trade surplus remained robust, with a recorded surplus of R24.77 billion in March, the highest in four months, bolstering local assets.
Headline inflation edged up to 2.8% year-on-year in April from 2.7% in March, remaining below the SARB’s target range of 3% to 6%. The slight increase was attributed to rising food and non-alcoholic beverage prices, which reached an annual rate of 4.0%, the highest since September 2024.
The proposed 0.5% VAT increase, initially scheduled for 1 May, was officially scrapped due to political disagreements within the coalition government. This decision is expected to widen the budget deficit to 4.8% of GDP and increase gross debt projections to 77.4% of GDP for the 2025/26 fiscal year.
Regarding trade relations, South Africa was granted a temporary exemption from the harshest U.S. tariff increases, with critical minerals and metals, including platinum, gold, and aluminium, spared during a 90-day pause. However, key sectors like automotive and agriculture remain vulnerable if trade negotiations stall.
Equity Markets
Local equity markets performed strongly in May. The JSE Top 40 Index rose by 2.86%, reaching 86,152.21 on May 27. The Capped SWIX index also showed positive momentum, supported by gains in industrial and financial shares. Listed property continued its upward trend, with the FTSE JSE SA Listed Property Index (SAPY) increasing by 2.32%, driven by improved investor sentiment and attractive yields. Industrials outperformed, with the FTSE JSE Industrial 25 Index rising by 3.98%, benefiting from increased manufacturing output and export sector growth. Financials also posted gains, with the FTSE JSE Financial 15 Index advancing by 2.10%, amid optimism about potential monetary easing later in the year.
Best performers:
- Sibanye Stillwater Limited | 27.53%
- Sasol Limited | 26.6%
- Glencore plc | 16.48%
- Impala Platinum Holdings LTD | 16.46%
- Valterra Platinum Limited | 10.25%
Worst performers:
- Harmony Gold Mining Co LTD | -13.17%
- Goldfields LTD | -3.26%
- Nepi Rockcastle Plc | -3.03%
- Clicks Group Limited | -1.88%
- Anglogold Ashanti PLC | -0.50%
Bond Market:
The South African bond market remained steady in May, influenced by expectations of monetary policy easing and favourable commodity prices. The South African Reserve Bank (SARB) lowered its benchmark repo rate by 25 basis points when it met on 29 May, due to inflation being well within the target range. This also contributed to the positive sentiment in the bond market.
GLOBAL MARKETS
Exhibit 2 | Global Performance (base currency) May 2025
Source: Factset. Data as at 31 May 2025. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.
United States
U.S. equity markets experienced heightened volatility in May, influenced by ongoing trade tensions and economic uncertainties. The S&P 500 Index only gained (approximately) 1% year-to-date, as investors grappled with the implications of new tariff policies and fiscal concerns. Consumer confidence showed signs of improvement, with 19.7% of consumers expecting business conditions to improve, up from 15.9% in April. The S&P 500 was up 6.29% and the Nasdaq 100 up 9.6% for the month, recovering well from some early volatility.
Europe
European markets outperformed their U.S. counterparts, buoyed by increased defence spending and a more optimistic inflation outlook from the European Central Bank. The MSCI Europe Index gained 4.6% in May, marking the fifth consecutive month of outperformance relative to U.S. equities. Germany’s DAX Index reached a new record high of 24,161.15 points, increasing by 6.67% for the month, driven by gains in defence-related stocks amid geopolitical tensions. The Euro Stoxx 50 is also up 5.42%, capping off a great month for European stocks.
United Kingdom
In May 2025, UK equity markets exhibited resilience amid a complex global backdrop. The FTSE 100 Index concluded the month at 8,726.01, reflecting a year-to-date gain of approximately 9.45%. Investor sentiment was buoyed by easing trade tensions and favourable economic indicators. The FTSE 100 saw solid gains and increased by 3.78% despite some mid-month volatility.
Asia
Asian markets had a solid performance in May. Japan’s Nikkei 225 Index rose by 4.15%, supported by a weaker yen and strong corporate earnings. China’s Shanghai Composite Index saw good returns of 2.23% even if market sentiment remains fragile, largely due to the United States maintaining tariffs on Chinese goods, regulatory uncertainty in the tech sector and weak manufacturing data. The Hang Seng Index in Hong Kong rose by 5.3%, recovering from recent lows amid bargain hunting in Chinese tech and property shares. The rebound was also supported by expectations of increased policy support from Beijing, including easing credit conditions and targeted fiscal measures to stimulate domestic consumption.
Emerging Markets
Emerging markets showed resilience, with the MSCI Emerging Markets Index gaining 4.38% in May. Investor interest shifted towards non-U.S. assets amid concerns over U.S. fiscal policies and trade tensions. Notably, Latin American markets, particularly Brazil, benefited from rising commodity prices and improved economic indicators.
Commodities and Currencies
Commodity markets experienced fluctuations, with oil prices declining due to concerns over global demand and increased OPEC+ production. Gold prices remained relatively stable, as investor demand continues to increase due to global uncertainty. Currency markets saw the U.S. dollar weaken against major currencies, influenced by shifting interest rate expectations and fiscal policy debates.
Outlook
The global economic outlook in May 2025 remains clouded by a combination of geopolitical tensions, monetary policy uncertainty, and the lingering effects of elevated tariffs. While equity markets recovered some ground during the month, underlying economic data points to a more fragile and uneven global recovery.
The International Monetary Fund (IMF) has maintained its downgraded global growth forecast of 2.8% for 2025, citing persistent risks tied to U.S.-China trade disputes, subdued manufacturing activity in Asia, and fiscal tightening across developed economies. The U.S. and Europe continue to diverge in their economic trajectories, with the Eurozone benefiting from stimulus-backed momentum while the U.S. grapples with stagflationary pressures and delayed monetary easing.
Short-term support is still coming from resilient consumer spending in the U.S., moderating inflation in Europe, and stabilising commodity prices. However, signs of weakening business investment and a more cautious hiring environment globally suggest that momentum may stall as the year progresses.
In South Africa, the picture is similarly mixed. While the rand found support from firmer gold prices and strong trade surplus figures, local confidence remains subdued. The decision to abandon the proposed VAT hike has improved short-term political cohesion but added pressure on fiscal projections, with the Treasury now expecting a wider budget deficit of 4.8% of GDP and gross debt rising to 77.4%.
Moreover, although South Africa received a temporary reprieve from the harshest U.S. tariff increases, key export sectors such as automotive and agriculture remain vulnerable. Political uncertainty within the Government of National Unity (GNU) and delays in implementing structural reforms continue to dampen sentiment and weigh on long-term investment plans.
Given these dynamics, we maintain a cautious stance. Portfolios are positioned to absorb volatility, emphasising high-quality assets, geographic diversification, and long-term strategic allocation. In a market environment where sentiment can shift rapidly, staying invested, avoiding reactionary moves, and focusing on fundamentals remain essential.
