May ends with mixed results amidst inflation uncertainty




So where do markets go on the first day of the new month (and for many companies, the final month of the second quarter and the 2023-24 financial year)?

Those investors who followed the old market adage of selling in 'May and going away' (for the northern summer until early September) missed a month of gains. They could have been higher, but for the weak news on inflation and growth in the US and the surge and then retracement of key commodity prices like gold and copper.

Friday’s release of the final inflation report for April in the US - the personal consumption and expenditure income, spending, and prices reports - proved inconclusive. There was no change in some headline price measures, a small gain elsewhere, but nothing really to reassure markets that inflation is still easing.

Ten-year US Treasuries ended the week and month at 4.50%, up 3 points for the week but down one and a half points for the month. Two-year bond yields ended at 4.88%, down slightly for the day, off more than 7 points for the week but up 5 points for May.

The US dollar fell for the week and for May. The Aussie dollar rose 0.4% for the week and 0.6% for the month and spent most of the month above 66 US cents. The month ended Friday with the Dow enjoying its best session of the year, because the PCE report and especially its core price measure - which is the Federal Reserve’s preferred inflation measure - came in largely around expectations and there were no shocks.

The Dow ended up 574.84 points, or 1.51%, at 38,686.32. The S&P 500 added 0.80% to 5,277.51 while the Nasdaq eased by the tiniest of margins - 0.01% to finish at 16,735.02, as Nvidia and a few other megacap technology stocks lost ground, but Apple rose, putting more distance between it and Nvidia at the close.

But the S&P 500 and Nasdaq ended five-week winning streaks with slides of 0.51% and 1.1%, respectively, and the Dow slipped 0.98%, marking a second straight week of losses.

Despite those losses, it was still a winning May, with each of the major benchmarks registering a sixth positive month in seven.

The Dow added 2.3% for the month, while the S&P 500 rose 4.8%. The Nasdaq gained 6.88%, notching its best month going back to November with Nvidia’s 30% plus gain the main source of the huge gain with Apple kicking in with a near 14% rise.

Nvidia shares will be split this Thursday in the ratio of 10 to 1, which is sure to spark a surge in demand from retail investors.

Tesla shares stood out with a loss of 1% for the month, but Netflix shares enjoyed another month of gains with a rise of more than 16%.

Elsewhere, European shares enjoyed a small gain Friday with the key Stoxx index up nearly 0.3%. For May, the index added 2.3%, the best gain for a monthly since March and in anticipation of an expected cut in rates by the European Central Bank this Thursday.

That’s despite a rise in eurozone inflation to 2.6% in May from 2.4% in April and a forecast of 2.5% from most economists.

Today should see Australian investors going on with Friday’s end-of-month gains.

At the close of trading early Saturday, Sydney time, the overnight Share Price Index futures platform had a gain of 38 points penciled in for the restart of ASX trading this morning.

Friday saw the ASX 200 Index rise 73.50 points, or 1.0%, to 7,701.70. But that still left the index down 0.4% for the week - but up 1.74% for May.
In initial public offering news, Guzman y Gomez launched an IPO on the ASX to raise $242.5 million.

The fast-food restaurant expects to begin trading on June 20 with the code GYG with a possible market value of $2.2 billion.

Japan's Nikkei share average ended more than 1% higher on Friday, rebounding from a one-month closing low on Thursday on expectations that a Fed rate cut in the US is still on the cards and ahead of the inflation report from the EU.

The Nikkei rose 1.14% to 38,487.9 after a three-day slide. It was down 0.4% for the week but up 0.2% for the month.

In Hong Kong, the Hang Seng lost 0.7% for May, and the CSI 300 index fell 2.1%.

Year to date, the ASX is just by almost 1%, the Nikkei is up a solid 15%, the Hang Seng is up 8%, China’s CSI 300 index is up 5.7% for the first five months, and the Shanghai Index Composite is up 4.2%.

The Stoxx 600 index is up nearly 8.2%, while on Wall Street, Nasdaq leads with a 13.3% rise, the S&P 500 is up 11.3%, and the Dow is up almost 2.6%.

Nvidia shares are up more than 127%, and shares in Warren Buffett’s Berkshire Hathaway are up 13.3%.


Name Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.