Equity markets were stronger in May. In the US, the S&P 500 rose +4.8%, whilst the Nasdaq was also very strong, up +6.9%. In the UK, the FTSE rose +1.6%. Of note, more than half of the S&P 500's gain was due to four mega cap tech stocks (Nvidia +26%, Apple +13%, Microsoft +7%, and Alphabet +6%).

On the ASX, the All-Ordinaries Accumulation Index materially lagged the US indices, rising +0.9%. Technology was the top performing sector (assisted by strong results from Xero and Technology One). Banks also performed well, due to a better than feared reporting season. Telecommunications was the worst performer, dragged down by the underperformance of Telstra.

Economic data released from the US in May was generally softer than expected: GDP growth weakened to +1.3%, whilst the April jobs report was also lower than expected. Unemployment remained at 3.9% (almost a 50 year low). Fed Fund Futures are now pricing in a 60% chance of a rate cut at the September Federal Open Market Committee (FOMC) meeting. In bond markets, yields were relatively flat during the month. The US 10-year government bond rate declined - 6 basis points to close at 4.57%, whilst its Australian counterpart was stable, closing at 4.41%.