The bull and bear tug of war is on. Who will pull the hardest?

US 0.2%
US equities are almost the perfect showcase of the standstill that financial markets find themselves in these days. The performance basically ended flat for the month despite a lot of action – especially on the macro-political side. Early in the month, one of the most anticipated FOMC meetings in quite a while took place and ended much as people expected. The debt ceiling negotiations also took place in May and seem to be over without any real fuss. Artificial Intelligence stocks have been very much in focus for most of the month in a positive light. But later in the month, they also took a turn down as the valuation of these equities was brought into question.

Europe -3.2%
Despite being the outperformers of the past year, European stocks disappointed in May, falling 3.2%. On the top line, this move can be a head scratcher, as several European economies showed signs of easing inflation during the month. But it seems as though weak data coming out of China indicated faster-than-expected slowing of production in companies strongly connected to the eurozone took precedence. Simultaneously, the worries about how the US debt ceiling negotiations would end sent negative karma across the Atlantic, despite the chilled outcome.

Asia -1.2%, Emerging Markets -1.9%
Both Asia and Emerging Markets regions are quite interesting in evaluating May’s performance figures, as both regions are heavily dominated by Chinese equity performance and that has not been a pretty story. Several key figures regarding production and activity in China have indicated a faster and quicker downturn than most experts anticipated. This has sent Chinese equities down by a rather wide margin. As mentioned, that has sent tremors westward, muting equity performance in Europe, but it has also pulled down both Asia and Emerging Markets, despite decent performance in South Korea, Japan and India.

In many ways, AI was the topic of the month for equities. That, combined with a solid earnings season, put the Information Technology sector in front as the month’s best performing sector, climbing 8%. The only other sector in positive territory was Communication Services.

Energy was the worst performing sector, falling more than 10%. The negative performance is closely tied to the month-long sell-off in oil and the re-emergence of short speculators in that realm. Oil showed some signs of stabilising in the latter part of the month, but it wasn’t enough to avoid taking last place. Materials was the second-worst performing, due in large part to growing worries of a financial slowdown based on weak Chinese data.

Bond performance was muted but negative across the board. Those results are basically down due to uncertainty as to whether the tightening of interest rates is coming to an end or will continue, combined with a strong dollar and falling commodity prices.