Market Commentary

May market commentary

Global share markets staged a relief rally in May, as the Trump administration dialled back its aggressive stance on tariffs and kicked off negotiations with some high-profile counterparts. While its trade deal with Britain was encouraging to witness from the sidelines, there was little groundbreaking in its fine print.

However, markets could hardly contain themselves when the US and China agreed to suspend their respective (heftily reduced) tariffs for 90 days while they continued talks. Investors went giddy for tech stocks again amid some decent results from Microsoft and Meta and another earnings ripper from Nvidia, as well as a slew of investment deals from the Middle East, which conveniently coincided with the US Presidential visit to the region.

Trump kept markets on their toes later in the month when he announced 50% tariffs for the European Union, a pledge he characteristically rescinded 48 hours later. Meanwhile, the Fed elected to keep interest rates on hold once again and the US lost its triple-A credit rating due to concerns about the cost of Trump’s policies.

While our local market lagged its US counterparts as our economy continued to drag itself clear of recession and earnings season kicked off with mixed results, sentiment was still largely supportive. The Reserve Bank provided a helping hand by cutting rates to their lowest in more than two years.

Across the ditch, while the downward trend in oil prices put pressure on the energy sector during the month, Australian markets were upbeat overall, particularly after the Reserve Bank trimmed interest rates by another 25 basis points. The Bank tried to tone down talk of further cuts, citing ongoing uncertainties around tariffs and the labour market. However, investors paid little heed, even when fresh data showed inflation ticked higher than expected in April.

Against this backdrop, the S&P 500 finished May up 6.2%, while the tech-focused Nasdaq jumped 9.6%. The NZX 50 rose by 4.3% over the month, while the ASX 200 gained 3.8%. Meanwhile, the UK’s FTSE 100 finished up 3.3% as the UK’s bilateral trade agreement with the US buoyed spirits. However, a surprisingly hot inflation read tempered gains later in the month, with UK consumer prices jumping to a 15-month high of 3.5% in April compared to 2.6% in March.

GBP and AUD / NZD exchange rate change from 30 April 2025 to 31 May 2025:

GBP and AUD / NZD exchange rate change from 31 May 2024 to 31 May 2025: