Equity markets continued to surge during May on optimism that the global economy would be progressively reopened as COVID infection rates continue to fall. The recovery in risk assets has been quite remarkable since the trough of March 23rd, which underlines the powerful impact of the fiscal stimulus and liquidity management measures taken.
The Australian market advanced a healthy 4.4% for the month on the back of a stronger resource sector as a surging iron ore price pushed major mining stocks higher which also catapulted the AUD through US70c, some 22% off its March lows.
The US market was also strong advancing 4.8% with the shock May employment gain of 2.5 million jobs (against a forecast loss of 8 million) causing a sharp reappraisal of the strength of the US economic recovery. The burgeoning technology sector saw the NASDAQ 6.9% higher, fast approaching an all-time high.
The risk-on mood saw a broad recovery around the world with Japan up 8.3%, Germany up 6.7% and the UK 3.3% higher.
Bond markets were fairly subdued but Australian bond yields pushed slightly higher over the month as investors switched into equities.
In commodity markets, the big story was the sharp advance of the iron ore price which broke through $US100/tonne as increased Chinese demand, together with supply problems from the COVID ravaged Brazilian mines, saw heavy demand from Australia.