Those who favour sell in May have their chance

Should you want to sell in May and go away, the past month was the perfect opportunity, as stocks around the globe had a pretty good month. Everything is sort of back to where it was at the start of the year. Investors suspected that there would be a point at which, if markets provided enough pain, Trump would step back from the tariff brink. They have even given him a new nickname now, TACO Man, to support this belief—Trump Always Chickens Out, which I imagine will irritate and antagonise him to quite some degree. Over the weekend, Trump proudly announced he was doubling tariffs on steel imports from 25% to 50%, to an assembled mass of Pittsburgh steelworkers, apparently continuing to defy a court judgment as to the legality of such tariffs, equity markets are opening slightly on the back foot this morning but not dramatically so. Possibly illustrating that the markets have moved on from tariff fears. Whatever and wherever the tariff policy goes now, it will leave collateral damage; only time will tell how much exactly.

The S&P 500 comfortably broke through that 5000 to 5500 trading range and now sits just beneath another milestone, the 6000 level, where it seems at present to be struggling to break through. There was some positive economic news on Friday as inflation measured by the Personal Consumption and Expenditure index fell to 2.1%, below the forecast of 2.2%. This may give the Fed enough leeway to cut rates at their meeting in a couple of weeks by 25 basis points. The odds, one would say at present, are even money at best.

This week, we receive the usual monthly PMI surveys from around the globe, as is customary at the start of each month. We also have the monthly US employment report, and the ECB convenes this week to discuss monetary policy and whether they will once again reduce interest rates. Ahead of the meeting, we get the monthly euro area inflation report. The odds appear to be in favour of a cut. The Fed could be further influenced this week with the release of the latest updates to non-farm payrolls, wages, and unemployment data on Friday. We may start to see the impact of tariff uncertainty in the coming weeks reflected in the economic data. The composite PMI, combining services and manufacturing for the UK, is expected to pick up slightly from last month but remain below 50, indicating contraction in the economy. Aside from that, there is little in the way of UK economic data this week.