Apparent progress in US-Iran peace talks and concomitant lower expectations for oil prices and inflation led to good performance for equity markets globally in May, 2026. The Morgan Stanley ACWI (All Country World Index) ex USA was up 5.11% for the month and 14.65% year-to-date (January 2, 2026 to May 29, 2026). Their corresponding US index was up 5.27% for the month and 11.06% year-to-date.
The MSCI ex US developed market index was 2.91% for the month, with all regions in positive territory. The European index was up 2.79% despite the UK, buffeted by political uncertainty and economic weakness, returning a negative .28%. On the other hand, the Netherlands index was up 9.26%, led by ASML that returned over 50% year-to-date. Investors continued to warm towards Japan’s pro-growth administration and technology stocks – the index was up 4.98%, and the Developed Pacific index was up 3.8% for the month. Profit taking and commodity volatility muted the performance of the Canadian index, which only returned 1.04%. Year-to date, MSCI’s international developed market index is up 9.73%.
MSCI’s EM (Emerging Market) index was up 9.71% for the month despite the negative 3.01% return by their Chinese index. Analysts have credited a decline in the economic outlook, trade tensions, capital outflows and a crackdown on illicit cross-border stock trading for the weakness in the Chinese index. Meanwhile, Morgan Stanley’s removal of 18 Indonesian companies from their Global Standard and Small Cap categories contributed to the 12.66% decline of its index. Elsewhere in Asia, technology-heavy markets, Taiwan and Korea, were up 16.53% and 35.29%, respectively.
Higher oil prices and election uncertainties weighed on Brazil’s and MSCI’s EM Latin America Index which were down 9.13% and 4.16%, respectively. Inexpensive labor markets and on-shoring have been credited for strong Eastern European emerging markets, whose MS representative index was up 5.98% in May. Year-to-date the MSCI Emerging Markets Index is up 25.74%.
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