If one were to look at only the start and end of month data in the table above then, barring China, you might come to the conclusion that for equity markets May was a quiet month. However, these figures belie the truth. In fact, the month witnessed some extreme moves for these markets from the highs to lows and back again. The unchanged Euro Stoxx 600 fell nearly 6 percent from its starting value and the S&P 500 nearly 5%. The latter flirted briefly with the index attaining bear market status, although the tech laden NASDAQ was already firmly in that category.
The reasons for these swings were varied and we have often reported on some of them: inflation,
exacerbated by the conflict in Ukraine and China’s lockdown, and central bank language over how they were going to handle these multi-decade inflation highs. However, during May, volatility was also sparked by some negative news on company earnings. Most notably, we saw surprises on this front from major US retailers such as Walmart. Such stocks were previously regarded as relative havens during an inflationary environment, so negative news on this front saw large falls in their share prices. Consequently, value stock indices, which had up until this point provided some respite for investors, fell in tandem with growth stocks for a short period.