03/06/2022 11:25
May was a roller coaster month for equity markets, characterized first by strong declines and then by equally strong rebounds. As BG Saxo analysts point out, the MSCI World Total Return USD index, after a drop of 5.5%, closed the month of May with a flat trend.
This is because sentiment changed last week thanks to some signs suggesting that inflationary pressures may have peaked. However, Fed member Christopher Waller said earlier this week that he is willing to aggressively fight inflation by raising rates by up to 50 basis points at each meeting until concrete signs of a cooling of the rise in prices. Fears about inflation are also growing in Europe and Robert Holzmann, a member of the ECB, explained how record inflation, worsened by the energy and food situation, increases the need for a 50 basis point increase in the rate also in the Old Continent.
In short, the conditions that surround us have not changed drastically and consequently the analysts of BG Saxo still remain defensive on the shares because they expect more restrictive financial conditions, higher interest rates, persistent inflation worsened also by the lockdowns in China.
Analysts at BG Saxo saw a big difference in performance in May, and the best performers were China’s small giants, semiconductors and energy storage driven by Chinese policy actions to support green transformation.
By contrast, the worst performing thematic baskets are Bubble Stocks, cybersecurity (although it remains a favorite of BG Saxo over the long term), cryptocurrencies and blockchain.