.jpg)
Investors remained on edge in May, even as an ongoing economic expansion helped the STOXX® Global 1800 Index post a 0.4% gain, when measured in US dollars, for the month.
The US administration again moved to limit imports, hastening concerns that a trade war is brewing –not just with China but also with other partners around the world. Some emerging markets were hit by a run on their currencies, as investors sold off markets most vulnerable to rising US interest rates. The STOXX® Emerging Markets 1500 Index slid 4.6% in the month.
But it was the political situation in Italy, where a government made up of euroskeptic parties was eventually formed, that wreaked real havoc as the month drew to an end – even if much of the sell-off was later undone. Investors fear a repetition of the anti-euro campaign that destabilized markets a couple of years ago. As a result, the EURO STOXX 50® Index led losses in May among regional indices.
A 3.4% drop in the euro against the dollar lifted the relative price of international holdings for Eurozone-based investors.
Pure factor investing showed mixed results over the month, while dividend indices underperformed, with strategies most geared towards so-called value stocks showing the worst returns. A minimum variance strategy worked in Europe but not for US and global indices, where market-capitalization-weighted indices performed well.
Thematic investing sounded the month’s positive note. The STOXX® Global Artificial Intelligence Index, for instance, returned 400 basis points more than the broader STOXX Global 1800. The performance helped the theme of AI and others including breakthrough healthcare, digitalization, and automation and robotics, build on their outperformance in the past year.
Please find details in the attached document.
