Elections, trade wars and interest rate cut expectations dominated the financial headlines in May which saw global financial markets give back some of the gains recorded so far this calendar year.
The Australian share market was the stand out performer improving 1.1% to be the only developed market to post a positive return for the month. The surprise re-election of the Federal Coalition government confounded opinion polls, thwarting the anticipated introduction of new taxation measures flagged by the opposition Labor Party. In addition to this, interest rate cut expectations and a relaxation of loan affordability measures by APRA gave the local market a long overdue shot in the arm.
Things were not so rosy for offshore markets as the long running trade dispute between the US and China re-emerged as a threat to the global growth outlook. The major protagonists were hard hit with the US market down 6.6% and China 7.2% while the rest of the world fared little better with Europe down 6% and Japan 7.4%.