Investment

May General Markets Comments

by Pierre Mouton

May General Markets Comments

“Take the money and run”– The Steve Miller Band, 1976.

Are market participants in a “Take the money and run” mood in 2022? Perhaps, because on top of being extremely difficult this year, broad financial markets have shown high levels of volatility, which have been blatant in up moves like in down moves. May was the perfect illustration of this, and not only for Equities: the MSCI World did a round trip from -6.8% to + 8.1% to end up the month down a meagre 0.16%, US 10-year yields went from 2.91% to 3.20% and then all the way down to 2.7% and finished at 2.86%, WTI began at $105, travelled down to $98 and up to $ 118… well, you see the picture: sudden and significant gyrations, greed and fear in action at the same time.

This makes investors’ life uneasy. Temptation is high to take quick profits when there are some, and to sell rapidly on the downside in order to limit losses. Whatever the direction markets are headed to, people tend to take the money and run, even at a loss.

Sentiment is quite logically mixed: between rising Commodity prices and inflationary pressures, hawkish Central Banks, fears of a serious slowdown, not to say a recession, and geopolitical tensions, all financial markets are complicated. Will corporate earnings be jeopardized? Will interest rates stop climbing? When will Commodity markets start to ease? Why does Gold perform so poorly in such an environment?

After mid-May’s carnage, there’s some satisfaction to see muted drawdowns for equity markets, thanks to a strong rally in the second half of the month: the S&P 500 even gained 1 basis point, the Nasdaq abandoned 1.65%, the MSCI Europe 1.48%, but both the Japanese Topix and the MSCI Emerging Markets were up (+0.69% and +0.14% respectively). Value still prevailed and added 1.73% while Growth lost 2.39%. Yields moved up in Europe (+18 bps for the 10-year Bund and +34 bps for the Italian 10-year BTP) but slightly fell in the US (-10 bps for the US 10-year Treasury). Credit was mostly flat, Gold fell 3.14% and Commodities were up 2.68%, once again driven by Oil (+9.53% for the WTI).

 

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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