Highs and Trump

For the month as a whole, the US S&P 500 Index rose by 4.1 per cent measured in USD, while the European Stoxx 600 Index climbed by 3.9 per cent measured in EUR and the Nordic VINX Index ended the month up 2.9 per cent measured in NOK. Investors in Norway (Oslo Stock Exchange) had to accept "just" 2.1 per cent.

Green shoots?

Measured by the MSCI World Index in local currency, the upturn this year has been all of 15 per cent. We have seldom had such a good start to a calendar year. This rise must be seen in connection with the correction and market unrest in December and the complete about-face by the US central bank (Fed). Global interest rates are also slightly more stable, but still much lower than in October and November. In the macro picture, downward adjustments still apply. However, there are signs of green shoots, especially in the service sector. Regionally, some Chinese macro figures are also more stable, and US macro figures have not fallen as much as feared. The eurozone's service sector has also improved. 

Trump towards 2020

For the USA, it is perhaps most correct to say that economic activity has declined less than feared. The first-quarter GDP figure showed that growth remained at over 3 per cent despite lower consumption and the shut-down of the public sector. The effects of the tax cuts have been expected to ebb away for a long time, but the macro figures have not fallen a lot yet. The labour market is still strong, with record-low unemployment of 3.6 per cent in April. Trump will probably do everything to maintain this picture until the election in 2020. The question is in which areas he can surprise us. Extensive tax cuts are impossible. Significant infrastructure investments also do not appear very likely.

Similarly, a solution to the trade war is probably something Trump wants. There was silence on this front for a long time, until Trump once again tweeted and threatened to increase tariffs at the beginning of May. These threats can be regarded as a negotiation tactic since talks are under way.

The road ahead …

At the beginning of May, the old mantra "Sell in May and Go Away" pops up in the media. Following the sharp upturn this year, some people will no doubt choose to do just that. At the same time, the alternatives to shares are still few and bad. For long-term fund savers, it is in any case less important whether it is May or November, or whether the stock exchanges have risen by a lot or a little in the past four months. It's about being invested over time.

"The poll that matters is the one that happens on Election Day"

Heather Wilson