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31/05/2024

After a negative performance in April, the markets resumed their upwards movement and ended May up +2.9% for the MSCI World in euros. Good corporate earnings releases and hopes of a rapid drop in interest rates in Europe fuelled this rise. All asset classes benefited, with a sharp drop in volatility, with the VIX falling below the threshold of 12 before recovering moderately. During the month, the Dow broke through the 40,000 mark for the first time and ended the month up 2.6%, the S&P hit a record high at 5,321.41 and rose +5.0%, and the Nasdaq surpassed 17,000 and gained 6.4% in dollars; the greenback weakened over the month and the changes converted into euros were 1.0%, +3.3% and +4.7%, respectively. Europe also performed well, with the Stoxx 600 breaking its record at 570.46 and posting a +3.3% rise (TR) while the Euro Stoxx gained 2.7% (TR). The trajectory of 10-year yields was volatile; after a decline in the first half of the month due to the deterioration in growth data, yields then rose sharply after better-than-expected employment numbers and business confidence data in the US. However, the publication at the very end of the month of consumer data below consensus and a downward revision of GDP for the first quarter reversed the trend. In the end, the 10-year rate closed at 4.5%, up +0.04% month on month. In Germany, the Bund rose from +0.08% to 2.66%, harmonised inflation figures for the eurozone accelerated to +2.8% year-on-year, above expectations of +2.7% and after +2.4% in April, but the markets still estimate a 97% probability that the ECB will cut its rates by 0.25% on 6 June, as inflation figures are affected by exceptional events. The sector rotation was marked, in favour of long duration sectors such as utilities (+6.7%) and real estate (+6.2%), followed by cyclical banks (+5.9%), construction (+5.9%) and commodities (+5.8%) while leisure (-4.5%) and consumer goods (-1.3%) lagged, as did energy (-0.5%) in the wake of lower oil prices. In China, the recovery remains moderate and uneven by sector. While industrial production growth accelerated to +6.7% YoY in April, retail sales growth slowed to +2.3% YoY in April, from +3.1% YoY in the previous month and +5.5% in the first two months of the year. In addition, China’s composite PMI dropped by one point to 51.7 in April, mainly due to a decline in the services index. The MSCI Emerging Markets index was down -1.0% in euros. The Topix lost 0.3% in euros, but the yen weakened over the month and the index gained +1.1% in local currency. Macroeconomic data came in well above expectations for the labour market (2.6% unemployment rate) and inflation (+2.2%), but private consumption and industrial production figures remain below consensus.
In this context, the fund slightly outperformed its benchmark, mainly due to its underweight position in personal and household goods and favourable stock selection in the banking sector.