The monthly performance for worldwide stocks is expected to be the best since the end of 2023. The MSCI global stock index increased by 5% in May, suggesting that market confidence has returned.
The U.S. inflation statistics that traders are keeping a careful eye on could have an effect on prospective stock values as well as interest rate factors.
Market sentiment is nevertheless influenced by evolving trade policy, court decisions, and macroeconomic indicators.
Ahead of the crucial PCE inflation report, a crucial metric that the Fed watches, Wall Street futures for stocks swayed. European equities recovered by 0.3% to 1% despite early distortions amid German sales at retail.
Following a strong 2% increase, profit-taking took place in Japan’s Nikkei index, and the stock market’s Hang Seng fell 1.2% as a result of tech and Apple suppliers’ responses to trade concerns.
Tariff Tensions and Dollar Strength Stir Volatility
Tariff-related uncertainty returned after a U.S. court temporarily blocked most of former President Trump’s trade tariffs.
A federal appeals court later reinstated parts of them, sparking further market jitters.
The ongoing legal back-and-forth is unsettling stock investors already concerned about global economic growth.
Adding to the unease is a lesser-known clause in Trump’s proposed budget that could allow a 20% tax on foreign investments, worrying global stock traders and foreign investors alike.
Meanwhile, the U.S. dollar rose 0.3%, nearing its first monthly gain of 2025. Benchmark 10-year Treasury yields also edged up, a sign of rising confidence in U.S. bonds.
The Japanese yen appreciated by 2%, trading near 144 per dollar, while the euro and British pound slipped 0.3% and 0.1%, respectively.
Oil prices, another market-moving factor, were mixed. Although prices dipped during the week, they remain higher overall this month.
Expectations of an OPEC+ production increase continue to pressure oil-linked stocks.
Emerging Markets and Long-Term Outlook
Currency improvements in the developing nations were extraordinary. Ghana’s cedi soared by 40%, boosted by gold’s sharp rise.
A broader emerging market currency index climbed nearly 2%, its best performance since November 2023—mirroring the strength in global stocks.
Given the current stock strength, uncertainty impedes the longer-term course.
Although Donald Trump’s management admitted that international trade talks with Japan are still dragging on, talks with China have allegedly “stalled.”
Investors are now able to weigh short-term market gains against future policy concerns. “The only thing that looks more certain is more uncertainty,” as FX expert Rodrigo Catril once said.
