May Monthly Market Review

An excerpt from our May Monthly Market Review: Global equities surged in May led by the U.S. market which touched record highs. Hopes for moderating price pressures, easier monetary policies, rising corporate earnings, and an incipient AI boom underpinned the strong rally. NVIDIA, whose market capitalization jumped by $537 billion in May, was a major catalyst to market gains that have been largely driven by a handful of AI-related, mega-cap stocks. In the credit markets, spreads narrowed further across the rating spectrum, with high yield spreads approaching the lows prevailing in 2007 just prior to the great financial crisis (GFC). The AI frenzy was also apparent in commodity markets. Copper prices jumped 5.1% in May and are up over one fifth so far this year, driven by speculative flows and tight U.S. supplies. Oil prices, in contrast, lost 6% in May, reflecting excess capacity and rising shale production. The trade-weighted U.S. dollar index fell but remains higher so far this year.

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