Is it sunny skies ahead or clouds on the horizon?

Is it sunny skies ahead or clouds on the horizon?
  • Markets in May
  • Global market indices
  • Currencies
  • Cryptocurrencies
  • Fixed Income
  • Commodity sector news
  • Key events in June

Markets in May

It’s been a good month for equity markets with corporate earnings growth coming in at the highest level since the first quarter of 2022. Big tech was again the primary driver and upbeat guidance caused analysts to increase estimates. Better-than-expected profit margins also played a role in the strong first quarter numbers.

The S&P 500 is up +4.59% MTD, while the Nasdaq 100 and Dow are up +2.74% and +8.19%, respectively. The NYSE is +1.09%.

US Treasury yields had a volatile May. Yields fell after the April CPI report showed a slight deceleration in inflation and retail sales showed a contraction in core spending. This signalled a potential downward revision to Q1 GDP growth and raised expectations for slower Q2 growth. However, yields remained supported towards the middle to latter part of the month by weak debt auctions and hawkish comments from Fed policymakers. The 10-year Treasury note witnessed a slight drop in yields of -2 basis points (bps) MTD. Similarly, the longer-term 30-year Treasury bond bps. The yield on the 30-year bond reached 4.73% by 29 May, representing a -1 basis point drop MTD. The 2-year Treasury yield hit 4.97% on 29 May, +1 basis point MTD.

The eurozone experienced a much higher jump in yields during May. The German 10-year yield is +8 basis points MTD while.the yield on the longer-term 30-year German bond bps, reaching 2.%. The German 2-year yield is +10 bps MTD. The spread between benchmark German yields and US 10-year Treasury yields is 191.48 basis points.

The Economic Picture

The US economy is still running strong with consumers becoming more confident despite indications that the Fed may only manage one cut this year. The May consumer confidence index came in at 102.0, ahead of consensus 95.7 and April's upwardly revised reading of 97.5 (was 97.0). The flash Composite PMI Output Index, which tracks the manufacturing and services sectors, jumped from April’s final reading of 51.3 to 54.4 in May, the highest level since April 2022. The increase was driven by the services sector, with the flash PMI rising to 54.8 from 51.3 in April. The manufacturing flash PMI was also up to 50.9 from April’s 50.0. Headline CPI rose to 3.4% y/o/y in April, slightly down from March’s 3.4%. Core CPI rose 3.6% y/o/y, down from 3.8%. The Fed’s preferred price gauge, the PCE Price index, is due out on Friday and is expected to show that inflation remains sticky at 2.7%, the same as March, which could delay rate cuts even further in 2024.

The labour market is showing signs of softening, with non farm payrolls only rising 175,000 in April, a significant slowdown compared to the upwardly revised 315,000 jobs added in March. The data for February was also revised to 236,000, a decline of 34,000. Average hourly earnings rose 0.2% from the previous month and 3.9% from a year ago. The labour force participation rate, or those actively looking for work, was unchanged at 62.7%. The unemployment rate edged up slightly to 3.9% from 3.8% in March, but remained below 4% for the 27th consecutive month. Annual wage gains also showed signs of moderation, with average hourly earnings rising 3.9% in the year through April, compared to 4.1% growth in March. Wage growth within a range of 3.0% to 3.5% is generally considered consistent with the Fed's 2% inflation target.

In the eurozone negotiated wages rose by 4.69% in the first quarter after a 4.45% rise in the previous three months, putting pressure on future ECB decisions. In April, services accounted for two-thirds of the 2.4% year-on-year rise in the eurozone’s headline inflation rate. At an annual rate of 3.7%, services inflation is above the level consistent with the ECB’s 2% target. The labour market remains tight, with Eurostat reporting that unemployment dropped further in April, falling by 0.1% to 6.4% in April, its lowest level since the formation of the currency bloc in 1999. Markets will therefore be looking closely at Friday's inflation data to get a better understanding of how quickly the ECB’s second rate cut may take place. 

In the UK, the economy has been slowly improving with GDP +0.6% in the first quarter compared to the previous three months. Inflation fell to 2.3% in April from March’s 3.2%, the lowest level since July 2021. However, the services component, seen as an indicator of underlying price pressures in the economy and closely followed by the BoE, came in at 5.9%. Unemployment was up to 4.3% and average wages remained sticky, increasing 6.0% in Q1 in comparison to the same period a year earlier. In addition, the S&P Global Composite PMI decreased to 52.80 points in May from 54.10 points in April of 2024 and the Services PMI fell to 52.9 from 55.0. Nevertheless, consumer sentiment is improving, with the GfK Consumer Confidence Survey showing a rise in the confidence index to -17 in May 2024, up by two points since April. Retail sales volumes also grew at their fastest pace since December in the year to May, with a weighted balance of 8% compared to April’s balance of -44. In addition Sterling is the only G10 currency that has appreciated this year against the dollar. As the UK now faces a general election on 4 July, the economy may be less of a worry with unemployment low, wages have outpaced inflation for 10 months and workers are feeling the benefit of £20 billion of tax cuts. However, there is still the weight of the higher cost of servicing public debt when growth is only starting to come back. This may force tax rises and spending cuts. The International Monetary Fund has warned that another £30 billion of savings need to be found to balance the books.

Global Market Indices


S&P 500 +0.24% QTD and +10.42% YTD
Nasdaq 100 +3.37% QTD and +12.14% YTD
Dow Jones Industrial Average -2.40% QTD and +3.09% YTD
NYSE Composite -2.83% QTD and +5.59% YTD


Stoxx 600 +0.15% QTD and +7.19% YTD
DAX -0.10% QTD and +10.28% YTD
CAC 40 -3.30% QTD and +5.19% YTD
FTSE 100 +2.90% QTD and +5.82% YTD
IBEX 35 +0.64% QTD and +10.32% YTD
FTSE MIB -1.73% QTD and +12.52% YTD

The Equally Weighted version of the S&P 500 is +0.88% in May, and its performance is +2.96% YTD.

The S&P 500 Information Technology is the leading sector this month, up +12.72% MTD +19.87% YTD, while the Energy sector has exhibited the weakest performance at -3.60% MTD +7.68% YTD.

According to LSEG I/B/E/S data, year-over-year (y/o/y) earnings growth for the S&P 500 in Q1 2024 is projected to be 11.1%. If the Energy sector is excluded, this number remains 11.1%. Of the 480 companies in the S&P 500 that have reported earnings to date for Q1 2024, 77.9% have reported earnings above analyst estimates, with 61.5% of companies reporting revenues exceeding analyst expectations. This falls short of the historical average of 62.2% and the last year's average (65.3%). The y/o/y revenue growth is projected to be 3.8% in 24Q1, rising to 4.5% excluding the Energy sector.

Technology, at 89.8%, was the sector with most companies reporting above estimates. Communication services, at 12.7%, was the sector that beat earnings expectations by the highest surprise factor. In the Utilities sector only 58.1% of companies reported above estimates. The Energy sectors’ earnings surprise factor was the lowest at 1.6%. The S&P 500 surprise factor is 8.1%. The forward four-quarter price-to-earnings ratio (P/E) for the S&P 500 sits at 20.9x.

In Europe, the Equally Weighted version of the Stoxx 600 is +2.59% in May, and its performance is +5.31% YTD.

The Stoxx 600 Technology sector is the leading sector this month, up +5.79% MTD +13.78% YTD, while the Oil & Gas sector has exhibited the weakest performance at -1.27% MTD and +5.73% YTD.

It is noteworthy that the Stoxx 600's gains this month and year-to-date have been more broadly distributed than those of the S&P 500, as evidenced by the performance of their respective equally weighted versions. In Europe, the equally weighted version of the Stoxx 600 outperformed the original index by a factor of 1.5x this month. Conversely, in the US, the equally weighted version of the S&P 500 underperformed the original index by 3.71 percentage points. This suggests that positive sentiment regarding future earnings is more robust and widespread in Europe.


MSCI World Index +0.78% QTD and +9.32% YTD
Hang Seng +11.70% QTD and +8.39% YTD

Mega cap stocks had a mostly positive May with Meta Platforms +10.27%, Amazon +4.01%, Alphabet +8.06%, Microsoft +10.23%, Nvidia +32.90%, Tesla -3.87%, and Apple +11.72%

Artificial intelligence (AI) has become a prominent topic of discussion in the market, with a record number of S&P 500 companies addressing it during their first-quarter earnings conference calls.

Between 15 March 15 and 23 May, 199 S&P 500 companies mentioned "AI" during their earnings calls, significantly exceeding the 5-year average of 80 and the 10-year average of 50. This figure also surpasses the previous record of 182 mentions set in the second quarter of 2023.

Among these companies, the average number of "AI" mentions per earnings call was 11, with a median of 5. Notably, 12 companies mentioned "AI" at least 50 times, led by Meta Platforms (95 mentions), Nvidia (86 mentions), and Microsoft (74 mentions).

The Information Technology sector demonstrated the highest engagement with the topic, with 50 companies (91%) referencing "AI" during their Q1 earnings calls. This underscores the growing significance of artificial intelligence across various industries and its integration into corporate strategies.

Energy stocks experienced a May with the energy sector -3.60% in May and +7.68% YTD. WTI was -4.31% and Brent +1.70% in May. Phillips 66 -3.51%, Shell -2.15%, Halliburton -4.43%, Apa Corp -7.22%Marathon Petroleum -5.10%, Occidental Petroleum Corporation -7.59%, ExxonMobil -3.92%, Chevron -2.71%, Baker Hughes Company -2.12%, and Energy Fuels +31.14%.

In May we saw a further consolidation of the Energy sector with the Hess shareholders backing the Chevron-Hess merger, and most recently, the announcement of ConocoPhillips' pursuit to acquire Marathon Oil.

Hess shareholders voted on Tuesday to approve the $53 billion sale of the company to Chevron, marking a significant step towards the merger. However, the deal remains threatened by an ongoing dispute with ExxonMobil over Hess's stake in Stabroek Block, a lucrative Guyanese oil field.

Several large shareholders abstained from voting due to this conflict, which centres on Exxon's claim of a right to challenge Chevron's offer for Hess's shares in the drilling consortium. Exxon has initiated arbitration proceedings in the International Chamber of Commerce in Paris, expecting them to extend into 2025.

Chevron CEO Mike Wirth expressed hope for a resolution in the fourth quarter but acknowledged the uncertainty surrounding the timeline. If Exxon's argument prevails, Hess's Guyanese holdings could become a liability, potentially scuttling the merger with Chevron and deterring other potential buyers.

Furthermore, Hess could be liable for a $1.7 billion breakup fee to Chevron under certain conditions if it pursues a new deal. Despite the shareholder approval, the outcome of the arbitration remains critical to the future of the Chevron-Hess merger and the strategic landscape of the oil industry.

ConocoPhillips announced a $17.1 billion all-stock deal to acquire Marathon Oil, a strategic move aimed at expanding its presence in key US shale basins and catching up with competitors in the race for new oil and gas reserves. Marathon Oil produced an average of 326,000 net barrels of oil equivalent per day in Q1 2024.

The agreement offers Marathon Oil shareholders 0.255 ConocoPhillips shares for each share they own, representing a nearly 15% premium based on Marathon Oil's closing price on Tuesday. This transaction will significantly bolster ConocoPhillips' footprint in the Eagle Ford in Texas, the Bakken in North Dakota, and the Permian Basin, while also strengthening its international presence through Marathon Oil's offshore assets in Equatorial Guinea.

Following the announcement, Marathon Oil shares rose by 8.4% to $28.68, while ConocoPhillips shares declined by 3.1% to $115.25. The deal, expected to close in Q4 2024 pending regulatory and shareholder approvals, has an enterprise value of $22.5 billion, including $5.4 billion of debt.

This acquisition marks ConocoPhillips' most significant US purchase since its 2021 acquisition of Shell's Permian assets and follows its earlier attempts to expand in the region through potential deals with Endeavor Energy Resources and CrownRock.

Materials and Mining stocks had a mixed month in May. The materials sector was +1.11% in May, and +4.59% YTD. Gold prices remained strong. In May Freeport-McMoRan +5.67%, Newmont Mining +2.46%, Nucor Corporation -1.15%, Sibanye Stillwater +9.65%Yara International +2.37%, Mosaic -5.13%, Celanese Corporation -3.76%, and Albemarle +2.60%.


Oil prices declined in May with WTI -4.31% MTD and Brent -3.54% MTD. Concerns regarding demand ahead of the summer season, as well as limited impact from geopolitical tensions in the Middle East have lessened support for oil prices.

Increasing global oil inventories through April, driven by subdued fuel demand, may bolster the argument for OPEC+ producers to maintain their existing supply cuts when they convene on 2nd June.

The upcoming OPEC+ meeting will focus on supply policy and the potential extension of voluntary cuts. Expectations are leaning towards the producers maintaining the current output reductions. The volume of oil held in storage by major consuming countries is a key industry indicator of market fundamentals, alongside factors such as the strength of physical crude markets.

Preliminary data from OPEC's May oil market report reveals that oil stocks among OECD countries reached 2.79 billion barrels in March, a 20 million barrel increase from the previous month and a 34 million barrel increase y/o/y, despite the existing OPEC+ cuts.

The International Energy Agency (IEA) similarly reported a total global stock increase of 34.6 million barrels in March compared to February, citing a significant rise in oil held on tankers in transit. This increase is partly attributed to longer voyages taken to avoid the Red Sea due to recent attacks on shipping by Yemen's Houthi group. The IEA suggests that inventories continued to rise in April due to the unloading of crude and fuel from tankers and decreased exports from Russia and the Americas.

While the physical market remains well-supplied, demand is slowing down. Notably, non-OECD inventories increased in March for the first time since November, although the IEA reports OECD stocks at their lowest levels in 20 years. Non-OECD crude stocks rose by 2 million barrels in March and a further 48.5 million barrels in April, primarily in China.

The usual springtime inventory build due to refinery maintenance ahead of summer demand has been exacerbated by steeper-than-expected global rises, a relatively mild winter in the northern hemisphere, and concerns about prolonged higher interest rates.

A 2 million barrel-per-day (bpd) increase in observable oil inventories in April contrasts with analyst predictions of a 200,000 bpd deficit for the month. However, OPEC said that OECD stocks are still 38 million barrels below the five-year average.

OPEC forecasts demand for OPEC+ crude to average 43.65 million bpd in the second half of the year. If the group maintains output at April's rate of 41.02 million bpd, this implies a drawdown of 2.63 million bpd.

Gold prices are +2.13% MTD and +13.47% YTD despite higher bond yields and hawkish rhetoric from the Federal Reserve, which have generally dampened market sentiment. However, continued demand from central banks has been supportive. Central bank gold purchases are projected to reach near-record levels again this year, with data from the World Gold Council indicating that official gold reserves have increased by over 1,000 tonnes in each of the past two years.

Additionally, gold’s appeal as a safe haven asset remains strong due to ongoing geopolitical uncertainties, including the upcoming US election, conflicts in the Middle East and Ukraine, Chinese military activities around Taiwan, and heightened trade tensions between the US and China.


The dollar gained ground against the British Pound in May, while falling inflation and signs of an improving economy helped boost the euro. GBP -1.80% YTD against the USD. The BoE kept rates on hold at 5.25% at its May meeting. Expectations for a first rate cut have moved to later in the year with markets now expecting a cut in November. The EUR -2.12% YTD against the USD. With inflation showing signs of recovery, the ECB has pretty much guaranteed a first cut in June despite its concerns over continuing wage pressures as the eurozone labour market remains tight, with unemployment at record low levels.

Sterling has risen to a 21-month high against the euro as investors have increased their bets that the Bank of England will start lowering interest rates much later than the ECB. The British pound was up 0.03% yesterday to trade at a high of £0.8482 per euro, a level last seen in August 2022. Sterling has now gained about 2% against the euro since the start of the year.


Bitcoin +9.56% 3 Months and +60.40% YTD
Ethereum +12.04% 3 Months and +64.26% YTD

The big news for May was the approval by the US Securities and Exchange Commission (SEC) of eight spot Ethereum ETFs in an omnibus order. The approvals were for the 19b-4 forms for the ETFs from BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton. The next step will be the issuers having their S-1 registration statements being accepted before they can trade. The process may take several weeks although BlackRock has already filed an amended S-1 form. Ethereum experienced a 26% jump in the seven days through Sunday, the biggest weekly advance since the 2021 crypto bull market run, according to data compiled by Bloomberg.

Fixed Income

US Treasuries 10 year yield to 4.62%.
German 10 year yield to 2.69%.

Treasury yields were up in May, with the benchmark two-year/10-year yield curve reducing its inversion. However, yields were hit by weakening bond sales. Auction sizes were increased earlier this year and there are concerns about the market’s capacity to absorb the new supply. These concerns are likely to deepen as net government bond supply is likely to rise to $340 billion for the US, eurozone countries and UK, according to data from BNP Paribas. This is due to a fall in redemptions and central banks continuing to trim their balance sheets. Markets are now only pricing in just over 30 bp worth of US rate cuts this year. The probability of a September rate cut has fallen to below 50%.

In Europe, the discussion remains focused on when the second cut by the ECB will be as the ECB has virtually guaranteed the first rate cut at its June meeting. However, bond yields remain high with eurozone benchmark Bund yields hitting fresh six-month highs ahead of the inflation data due on Friday. Money markets have priced in about 58 basis points of cuts this year.

In the UK, the Bank of England is unlikely to consider a cut before August, with most expecting the first cut in November, given that services inflation was at 5.9% in April and wages remain sticky, growing 6% y/o/y. BoE Chief Economist, Huw Pill, has suggested that policy will need to remain restrictive despite the BoE “capping” underlying inflation measures and that it is “not unreasonable” to expect the Monetary Policy Committee to consider cuts over the summer.

Note: Data as of 5:30 pm EDT 29 May 2024

What to think about in June 2024

There are a number of risks and opportunities for investors as we move into June. In the US the strength of the labour market will keep the Fed from cutting until at least late Q3. Although equities have had a good Q1, there is likely to be profit taking, especially in the Tech sector. In addition, a still hawkish Fed may hit the most rate-sensitive sectors. With the election cycle heating up in the US and debate around industrial policies and global trade likely to come to the fore as the Republican convention takes place in July and the Democratic convention in August. In addition, continuing tensions in the Middle East and expectations of rising food prices, particularly in Europe and the UK remains a worry for inflation watchers. There is also the ongoing war in Ukraine that continues to affect energy markets in Europe as well as global prices.

Key events in June

The potential policy and geopolitical risks for investors that could negatively affect corporate earnings, stock market performance, currency valuations, sovereign and corporate bond markets and cryptocurrencies include:

2 June 2024 OPEC+ Joint Ministerial Monitoring Committee (JMMC). The OPEC+ ministerial meeting is expected to discuss adjusting production quotas with a likely extension of the 2.2mn b/d cut in its entirety beyond the second quarter. Discussions will also focus on compensation by overproducers.

2 June 2024 General election, Mexico. Incumbent President Andres Manuel Lopez Obrador (AMLO) is term-limited. The main presidential candidates will be Claudia Sheinbaum (ruling party MORENA) and Xochitl Galvez (opposition party PAN). 

6 June 2024 European Central Bank Monetary Policy Meeting. The ECB is widely anticipated to begin rate cuts during this meeting. The only potential concern that may hold the ECB in check following this meeting is the continued strength in services inflation.

6-9 June 2024 European Parliament elections, EU. Far-right and populist parties will likely receive increased support over concerns related to immigration rates. Expect to see some politicians, particularly in CEE, focusing on the EU response to the ongoing war in Ukraine.

11-12 June 2024 Federal Reserve Monetary Policy Meeting. The Fed will give a summary of economic projections. The ongoing strength of the US economy, despite signs of falling inflation and a softer labour market, means that rates will very likely be held again at this meeting, with rate cuts not anticipated until at least September, if not later.

13-15 June 2024 G7 leaders’ summit. The summit will be held in Puglia, Italy. The topics likely for discussion include the ongoing war in Ukraine, the conflict between Israel-Hamas, concerns around economic and energy security, migration flows and the impact these are having on domestic politics in net recipient states.

20 June 2024 Bank of England Monetary Policy Meeting. Although inflation continues to drop amid a softening of the labour market, wage pressures remain high, meaning cuts may be delayed until after the summer.

While every effort has been made to verify the accuracy of this information, EXT Ltd. (hereafter known as “EXANTE”) cannot accept any responsibility or liability for reliance by any person on this publication or any of the information, opinions, or conclusions contained in this publication. The findings and views expressed in this publication do not necessarily reflect the views of EXANTE. Any action taken upon the information contained in this publication is strictly at your own risk. EXANTE will not be liable for any loss or damage in connection with this publication.

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