Global Market Watch: The Month of May or May Not

Markets saw a couple surprises in the last few weeks. First, the minutes of the April Federal Open Market Committee (FOMC) meeting sent a clear message that financial markets are underestimating the chances of another rate hike in June. The second story is the continued rise in oil prices.

Equity markets eked out another small gain in May. Yet the performance came exclusively from developed markets, especially the US and Europe, suggesting investors aren’t too concerned about the impact of higher US rates. The decline in emerging market stocks despite the surge in oil prices was even more surprising. It seems we are seeing the disconnect between rising oil prices driven more by changing supply expectations and falling industrial metals prices that are a symptom of weak global growth.

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