May 2020 saw continued recovery across global markets as many countries started to reopen their economies and relax their respective ‘lockdown’ measures that were implemented to curb the spread of COVID-19. Markets saw decreases in volatility as investors are now being watchful on how the situation develops. The S&P 500 climbed to end the month 4.8% higher and is now just 10% below the February peak. The infection rates among the major European economies have
fallen considerably, though the UK infection rate remains relatively high compared to these countries. Some US states are reopening even though their infection rate has only dropped to 65% of its peak in mid-April. Investors appeared to become somewhat more optimistic about the outlook after initial signs of success in human trials of a vaccine against COVID-19.
SA bonds had their strongest month since July 2008 and are now the best performing asset class over 3 and 5 years. The SARB revised its inflation and growth forecasts lower yet near term risks remain. Lower growth and slower inflation are pointing to a deepening fiscal and economic crisis. The MPC decided to cut the repo rate by 50 basis points, taking it to 3.75% per annum, with effect from 22 May 2020 in an attempt to further lift the economic pressure on consumers. Despite the first steps being taken to exit lockdown and some positive news on a potential vaccine, it is still too early to say with confidence how the public health outlook will evolve.
The JSE All Share Index (up 0.3%) ended the month somewhat flat.
Financials (down 3.2%) were the worst performing equity sector again with Resource stocks (up 5.6%) while Industrials (down 1.8%) saw slight losses.
Mid-cap shares (up 0.2%), Large-cap (up 0.4%) remained flat while Small-cap shares (down 3.2%) saw slight losses.
The MSCI World Index ended the month up 4.4% in US Dollar terms while Emerging Market equities lagged their Developed
Market peers and ended themonth up 0.8%.
The South African Listed Property sector (down 0.8%) ended flat while the SA REITs sector (down 4.7%) saw further losses in value.
The Rand appreciated 4.0% against the US Dollar, 2.5% against the Euro and 5.9% against the Pound Sterling.
In May the Oil price (up 39.8%) outperformed both the Platinumprice (up 7.5%) and the Gold price (up 3.1%) in US Dollars.
