Gold price takes top spot as the precious metal jumps 8.12% higher amidst on-going uncertainties clouding the global financial markets. The rapid spread of the Covid-19 virus continues to hold many Asian economies back. India, who has been plagued by record high cases, ended the month as the strongest performer in the Asian bloc. Strong performance from metal and energy stocks pushed the SENSEX 9.58% higher in MYR terms. China’s broader equity market also enjoyed a strong run (7.5% gain) during the month as encouraging economic data boosted investors’ sentiment. The same however, was not felt in Malaysia, where rising infection numbers led to another Movement Control Order, halting economic activities for the 3rd time.
In the News
- The US markets ended the month of May near all-time highs as risk appetite for US equities returned on hopes for a full economic recovery.
- Widespread vaccination rollout and relaxation of social distancing measures brought optimism to economic recovery, but was slightly dampened by rising inflationary pressures.
- To date, around 52% of the population in the US has received at least one shot of the COVID-19 vaccine, while 42% of people in the US is now fully vaccinated.
- Technology stocks underperformed the broader market in May, as investors transitioned into recovery plays. The broader S&P gained 1.61%, while the tech-focused Nasdaq dipped 0.5%, and the FANG+ Index slid 1.47% in MYR terms. The 0831EA, which provides -100% exposure into the index, gained from the weaker performance of the Index, and saw its NAV rise 1.68% last month.
- In China, the broader market outperformed its US counterparts, with the Shanghai Composite Index and the CSI 300 Index gaining 7.53% and 6.67% in MYR terms respectively.
- However, the S&P New China Sectors ex-A index lagged behind the broader market, as the central government’s crackdown on tech companies extended from the original tech giants Alibaba and Tencent, onto Pinduoduo and Meituan Dianping.
- As a result, the index recorded a dip of 0.75% in MYR terms last month, leaving the 0829EA with a YTD loss of 0.04% in MYR terms.
- Outside China, the sentiment in Asia was drastically different from its western counterparts, as various Asia Pacific countries faced a record-breaking surge in COVID-19 infections.
- In Malaysia, the Full Movement Control Order (FMCO) was introduced to curb sky high infection rates, which surpassed India in infections per capita.
- Concerns of rising case numbers saw the local bourse underperforming its regional peers, as the FBM KLCI index dipped 1.13%, while the Dorsey Wright Malaysia Technical Leaders Index dipped by 3.11%, leaving the 0836EA sliding3.3% lower over the month.
- With concerns looming over global financial markets, Gold price enjoyed a bull run in May. Gold outperformed equities as the weaker dollar performance and inflationary concerns brought the precious yellow metal near a five-month high.
- In May, the LBMA Gold Price Index jumped of 8.12% in MYR terms, while the 0828EA, which tracks the index gained 7.84% in MYR terms throughout the month.
On the Economic Data Front
- US economic data shows mixed recovery
- Inflation rates in April accelerated to its fastest rate in over 12 years, with CPI rising 4.2% from a year earlier.
- Federal Reserve policy makers have deemed the spike as transitionary, with expectations that rates will fall to 2% later this year. Fedsassured that action would be taken if proven otherwise.
- 559,000 jobs were added in May, below consensus of 650,000; while employment-to-population ratio ticked higher.
- China’s economic stability faces challenges
- Inflationary pressures were felt strongly as measures for both input costs and the prices service providers charged rose to their highest points of the year.
- Manufacturing PMI rose to 52.0 last month, the highest level since December, up from April’s 51.9.
- Services PMI fell to 55.1 in May, down from 56.3 in April but still well in expansionary territory.
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