Together with AMP New Zealand we provide a summary of the how the global markets performed in May 2021 and the key drivers of these results.
To use a common sporting analogy, May was a month of two halves for global markets.
In the first part of the month, there was some uncertainty and market volatility due to:
- Higher than expected inflation statistics in the US; which in turn lead to
- Uncertainty on when the US Federal Reserve would change their policy settings; and
- Sharp falls in cryptocurrencies – particularly Bitcoin – which are not in the AMP funds but the market seemed to take an interest in.
However, in the second half of the month, inflation fears faded as investors took guidance from central banks who continue to view inflationary pressures as temporary. Given this, markets were able to refocus on positive economic data, economies reopening and the continued roll-out of the Covid-19 vaccine – all positive factors.
So all in all global sharemarkets rose 1.0% in May, led higher by the European markets (+1.6%). Emerging markets finished May 1.2% higher lead by the Chinese and Indian markets, returning 4.9% and 5.8% respectively over the month. Australia (+2.3%) was also a strong performing market.
The New Zealand sharemarket continues to lag the rest of the world, as it has for much of 2021, falling ‑3.2%. There were two key contributors to this – another profit downgrade by A2 Milk soured sentiment, and Fisher & Paykel Healthcare missed market profit forecasts. But rising interest rates also weighed on the local market.