Global equities rose by 2.5% in euro terms in May, very much flattered by a more than 3% rally in the US dollar against the euro. Apart from currency moves, returns were driven entirely by technology as the AI theme gained even more momentum, Nvidia, at the epicentre, up 36% for the month and bringing the year-to-date return to 159%. At a global level, the only sectors in positive territory for the month (absent FX moves) were technology (+8.0%) and communication services (+2.1% which was driven by Alphabet, Meta and Netflix). All other sectors were negative. Market breadth therefore is extraordinarily poor, and although market indices remain supported, it is by fewer and fewer stocks, only ~20% of US stocks beating the index over the last 3 months, the lowest level since 1999. The month began with yet another bank failure as First Republic Bank was sold to JP Morgan, and whilst it appears that the banking sector stress has abated for now, deposits continue to flow from thebanking system, lending conditions continue to tighten, and significant question marks remain over bank profitability. The US debt ceiling was the focus of markets for much of the month, the bigger concern not being whether the US would default (a very low but non-zero probability outcome) but whether there would be swingeing cuts to federal spending as demanded by Republicans. In the end though, it amounted to nothing more than political theatre, a deal being done that doesn’t change very much at all.