Share markets rose in May as the US and Iran extended their ceasefire agreement by a further 60 days. As the two nations grapple to forge a lasting peace agreement, the dual Strait of Hormuz blockades remain in place. While Brent crude oil prices declined to around USD $90 per barrel by month end, a report from released by the International Energy Agency (IEA) stated that cumulative crude oil supply losses from Gulf producers exceeds 1 billion barrels since the conflict began, with more than 14 million barrels of oil per day being “shut in”. US President Trump travelled to Beijing for a summit meeting with Chinese President Xi Jinping, announcing additional Chinese purchases of US agricultural goods and 200 Boeing aircraft amid other trade-related commitments.
US business activity growth held steady in May at a modest rate according to PMI data from S&P Global, as manufacturing performance improvements were offset by data pointing to a sluggish service sectorIn Australia, the RBA raised the cash rate by 25bp to 4.35% citing inflation concerns, higher fuel and commodity prices, and the risk that these pressures broaden into more persistent domestic inflation. Later in the month, April CPI eased somewhat to 4.2% year over year while underlying (trimmed mean) inflation remained sticky at 3.4%.
The ASX300 returned 1.3%, A-REITs jumped 2.9% and small caps returned 2.0%. Currency-hedged global shares gained 4.9% while unhedged global shares gained 4.5% for the month, curbed by AUD vs USD strength. Australian bond yields declined across the curve, adding to returns for the Australian bond index which returned 1.6% for the month.
AUTHOR: Allan Grant Senior Portfolio Analyst
Disclaimer
The above is intended as general market commentary only and is not intended as, and does not constitute, advice of any kind. No liability is accepted for any action taken based on the above or for any loss suffered as a result of reliance on the same.
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