Our monthly economic review is intended to provide background to developments in investment markets as well as to give an indication of how some key issues could impact in the future.
It is not intended that individual investment decisions should be taken based on this information; we are
always ready to discuss your individual requirements. We hope you will find this review to be of interest.
• Geopolitical tensions increased in May,
as did concerns over the strength of global
growth. Trade tensions intensified between
the US and China, and later in the month
between the US and Mexico, as President Trump
announced plans to impose a 5% tariff on all
Mexican imports from 10 June. The President
is threatening a further increase to 25% by
October if Mexico fails to reduce the stream
of migrants to the US. There are concerns
that the unexpected tariffs could send the
US into recession, as Mexico is their largest
• Global markets were largely negative in
May and experienced an unsettled end of the
month in response to threats from China and
the US. As China prepares a sweeping blacklist
of foreign firms following the Huawei ban,
Chinese economic data was also in focus, as
manufacturing activity slipped into contraction
in May. Major Asian indices were affected at the
end of the month following the weaker than
expected data, as trade relations negatively
influence China’s economy.
• Major indices in the US and EU moved
lower at the end of the month after President
Trump’s new rounds of tariffs stoked recession
fears. On the continent, German data attracted
attention as unemployment increased for the
first time in five years and manufacturing
contracted. US manufacturing data was also
close to contraction.
• On the foreign exchanges, sterling closed
the month at $1.26 against the US dollar. The
euro closed at €1.13 against sterling and at $1.11
against the US dollar.
• Investors favoured safe haven assets,
including gold, which broke through resistance
at $1,286 as it headed through $1,300, to close
the month up 1.66% on $1,305.24. Brent crude
fell in the month amid trade tensions, to close
at $61.69 a barrel, down over 15%.