May 2025
Despite the uncertainty created by proposed tariffs and continuing regional wars, international markets in aggregate generated positive returns for May, 2025. As viewed on June 1st, the Gross MSCI Standard ACWI ex USA index returned 4.69% for May and 14.37% year-to-date. Their comparable US index was up 6.45% for May but still significantly lags its international counterpart year-to-date.
MSCI’s Emerging Market Index was up 4.31%. All regional indices yielded positive returns except for those representing EM GCC (Gulf Cooperation Council) countries. As they are oil-exporting countries, GCCs are sensitive to changes in oil prices.
Most developed market regions were in positive territory as well. MSCI’s Euro index was up 4.77% – moderating interest rates, delayed (everchanging) tariffs, increased investment in the Eurozone and improving UK GDP data were credited for investor confidence. These dynamics were reflected in the sectors that outperformed – the MSCI Europe Aerospace and Defense Top 20 Select Index was up 14.61% in May and the MSCI EMU Banks Semiconductors Autos Select index was up 10.76%. Virtually all major European indices were in positive territory for the month.
Elsewhere, good economic data boosted the Canadian and HK indices. Taiwan Semiconductor reported a good quarter leading to a rally in its home market; and South Korea rose ahead of June presidential elections. Outside of Peru, Latin American markets continued to do well. Morningstar believes investors found the valuation and opportunities in the region to be worthwhile for patient, value-oriented investors.
Entering June, US intended tariffs and geopolitical tensions continue to evolve and some market performance is deteriorating. Uncertainty is unsettling and can make valuing investments tricky. As I digest first quarter earnings reports, however, I find that guidance from many companies has already included the impact of tariffs and that managements are girding their businesses against shifting global scenarios.
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