Market Update – May 2021
Equities continued their bullish trends in April, rising by a further 2.0% in euro terms, the strength of the euro (+2.5% vs the US dollar) disguising even more impressive gains, driven by US equities (+5.4%), in turn driven by communication services (+7.6%), with US technology rising by +5.3%. Global Equities now stand +10.9% year-to-date. The market has begun to pay attention to quality growth again with heavyweights such as Facebook, Microsoft and Google making new highs during the month, and despite continued strong economic data prints over the month, US yields have failed to push higher after the Q1 sell-off, 10-year and 30-year yields ending the month some 11 basis points lower.
Market breadth is very supportive with 80% of US stocks and 71% of Euro area stocks above respective 50 day moving averages. At the same time, very few names are overbought with only 8% of stocks globally showing an RSI reading over 70 which indicates there is ample room for equity markets to grind higher.