Key market review takeaways for May 2025

• Fluid tariff developments and United States (US) fiscal worries dominated global financial markets in May 2025.

• Progress on tariff negotiations between the US and China (resulting in a 90-day postponement of previous large reciprocal tariff rate threats), a US-United Kingdom trade deal early in the month, positive trade engagements between the US and the European Union in the latter part of the month and a ruling by the US Court of International
Trade at the end of the month that most of the imposed US tariffs were unlawful, on balance boosted risk appetite among investors during May. As a result, global equities performed well in May, with US equities the standout gainer in developed markets, helping the latter to outperform emerging market equities in the month.

• In contrast, global bond returns suffered in May as their safe-haven appeal dwindled due to the positive tariff developments, while US bond yields shot up due to fiscal worries associated with the progression of President Trump’s expansionary US budget bill through Congress and as Moody’s credit rating agency became the last of its peers to cut US government debt from the top investment grade level. US bonds were also unimpressed when the US central bank confirmed that it would remain patient before contemplating further interest rate cuts.

• The South African (SA) rand benefited in May from a general risk-on environment globally, which eroded the rand returns on global assets and rand-denominated commodity exchange-traded funds (ETFs) for local investors. Despite this, rebounding support for the dollar platinum price from lower expectations for future electric vehicle production
and some substitution shift from gold to platinum jewellery due to the high gold price made the rand platinum price (ETF) the strongest performer among all global and local asset classes in May.

• All the main SA asset classes produced solid returns in May. Indications from both the SA Treasury and Reserve Bank (SARB) that the country’s inflation target would be lowered supported strong returns from local nominal bonds but undermined the relative attractiveness of inflation-linked bonds. An interest rate cut by the SARB towards the end of
the month also underpinned bonds. As a leveraged play on nominal bonds, listed property benefited from the nominal bond rally in the month.

• Dwindling worries about the longevity of the SA coalition government, propelled by the eventual passing of the local budget after the third time of trying, together with a more risk-on global sentiment and more favourable local rate expectations, supported a solid performance from SA equities in May, with the Industrial sector the star performer.

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