Economic Insightss Economic Insights | 4 June 2018 Stock ...

Economic Insightss

Economic Insights | 4 June 2018

Stock market Month-In-Review May 2018

Global bourses were mixed in May

Oil price retreats

US-China trade talks in focus

Global sharemarkets ended mixed in May. The key influences were the US-China trade dispute, proposed US-North Korea summit, oil price fluctuations and earnings results in the US and Europe. Political instability in Italy and Spain were influences late in the month together with fears of a global trade war. US blue-chip shares began the month on a weaker tone, effectively picking up where they left off in April. The Dow Jones fell for four straight days, from April 27-May 2. But the Nasdaq was better supported, lower for just two days in the period. Shares in Apple rose 4.4 per cent on May 2 after reporting solid earnings figures. On the same day the Federal Reserve left interest rate settings unchanged, but signalled rate hikes lay ahead. The May 4-14 period was more positive for global shares with the Dow Jones up for seven straight days and the Australian ASX 200 up for six days. In fact the ASX 200 fell just once in the first 10 trading days of May. On May 4, data showed US unemployment at 17?-year lows but wages were flat in the month. On May 8, US shares ended flat after President Trump signalled that the US would exit the Iran nuclear deal. And on May 14 there were signs of an easing of US-Chinese trade tensions. The period from May 15-23 was more mixed with US and Australian markets generally flat over the period. On May 21 the Dow lifted almost 300 points on news that the US and China had agreed to drop their tariff threats. In late May, oil prices eased, weighing on shares of energy producers, after Saudi Arabia and Russia began talks about boosting supplies of crude on the global market. Jitters over Italian politics and fears of a trade war added to volatility at the end of the month. Over May the US Dow Jones rose by 1.0 per cent. The S&P 500 index increased by 2.2 per cent and the Nasdaq lifted 5.3 per cent. Across Europe the German Dax fell by 0.1 per cent but the London FTSE lifted by 2.2 per cent. In Japan, the Nikkei fell by 1.2 per cent. In Australia, the ASX 200 rose by 0.5 per cent and the All Ords up 0.9 per cent.

Only five of the 22 sub-industry sectors in Australia fell in May. The Household & personal products sector lifted 22.5 per cent, underpinned by Blackmores. But Food, beverages & tobacco fell by 8.8 per cent while Telstra dragged the Telecom sector lower by 10.2%. And the small caps out-performed with the Small Ordinaries up 3.7 per cent in May.

Craig James - Chief Economist (Author)

Twitter: @commsec

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