May 2019 market overviewv
While global markets waltzed out of April with equities humming a happy tune, May saw several missteps and stubbed toes. Trade talk negotiations between the US and China broke down, and the announcements that trade tariffs on Chinese imports would resume in June startled investors. The S&P 500 ended the month down more than 6% – as did emerging markets and most of Asia. Trump also suggested a staggered tariff approach as the solution to stemming illegal immigration from Mexico, causing further scuffles. Then on the last day of May, the US entered into trade disputes with India, removing the benefits India had previously been receiving when deemed a developing country. The NASDAQ also faced a difficult month with Apple leading a tumble of the tech giants.
Asian markets came down, apart from Japan. China opted to decrease rare earth metal exports at month end and Chinese stocks took a beating, with the Shanghai composite down almost 6% for the month and the Hang Seng down almost 10%. Trade war effects worsened, with exports down further and Chinese unemployment at the highest point since 2009; the Chinese Renminbi also lost over 2% during the month. North Korea fired short-term missiles tests towards month end, putting Japan on edge and effectively testing the relationship between Japan and the US as the missile firing goes against the resolutions set forth by the United Nations.
Most European markets stumbled in May, with Germany’s DAX ending the month down over 5% and France’s CAC losing almost 7%. Germany’s growth forecasts for the year were reduced to 0.5% due to general trade tensions, better only than forecasts for Italy which were similarly down. In the UK, The FTSE 100 lost over 3% as uncertainty around Brexit doubled with the loss of Theresa May as Prime Minister.
Oil prices slipped and fell over 10% in May, down almost 20% from the peak in 2017. In contrast to this, gold saw an almost 2% increase – often observed during periods of global uncertainty. Locally, the same month that saw Cyril Ramaphosa sworn in as president saw the JSE slip into the red. Naspers lost over 10% while British American Tobacco lost just under 10%, but Sasol drew even more attention having lost over 20% by month end. Following the release of Steinhoff International’s financial account, the shares plummeted over 30%. As the President delayed announcing his cabinet members, the Rand also slumped. Surprising star performers helped investors nurse their wounds as Telkom hit a ten-year-high share price, up almost 10% for the month!
During May 2019 the FTSE/JSE All Share Index (ALSI) lost 4.84% on a total return basis, while bonds gained 0.64%. The SA Listed Property Index (SAPY) lost 0.87% over the month, and cash returned 0.61%. Internationally, the MSCI World Index lost 5.77% in Dollar terms and the MSCI Emerging Markets Index ($) lost 7.23%. This May the Rand lost 1.52% against the greenback and 0.96% against the Euro.
For the year to date, the ALSI and ALBI returned 7.09% and 5.26% respectively. Listed property returned 3.76% and cash returned 3%. Internationally, the MSCI World Index returned 9.75% in Dollars, and the MSCI Emerging Market Index returned 4.12% in Dollar terms.
Click here to read the previous market review – April 2019.