SPW MarketWatch: May 2024

  • Shunil Roy-Chaudhuri, Personal Finance and Investment Writer
  • 04 June 2024
  • 5 mins reading time

Source: FactSet, 3 June 2024. Figures are monthly price returns in local currencies for May 2024.

Sunak announces 4 July election

On 22 May Prime Minister Rishi Sunak made the surprise announcement of a 4 July UK general election. This may have been partly triggered by the latest inflation numbers.

April’s 2.3 percent inflation figure was higher than market expectations of 2.1 percent. Interest rates are a tool used by central banks to try to control inflation and the figure reduced the likelihood of the Bank of England making its first interest rate cut since March 2020. This dampened the UK’s short-term economic prospects and may have influenced Sunak’s election decision.

On 31 May, pollster YouGov gave Labour a 25 percentage point lead over the Conservatives (1) and we note that this kind of opinion poll lead has been pretty consistent throughout Sunak’s premiership (2). So what could we expect if there is a Labour government after 4 July?

As yet Labour has given little concrete policy detail. But in a March lecture at Bayes Business School, Labour shadow chancellor Rachel Reeves spoke of ‘stimulating investment through partnership with business’ (3). We believe this reflects a keenness to attract foreign investment and enhance its reputation with financial markets.

Despite the unexpectedly high UK inflation, we have a positive stance on UK government bonds (gilts), which have fallen by 2.6 percent in the year to date (4). We think inflation will continue to moderate, enabling the Bank of England to cut interest rates, and bond prices often rise when interest rates fall.

Donald Trump guilty of falsifying business records

On 31 May former US president and current Republican presidential candidate Donald Trump was found guilty of falsifying business records. This is the first time a former or serving US president has been found guilty of a crime.

Trump and current US president Joe Biden had been neck-and-neck in opinion polls ahead of the 5 November presidential election. But Trump has been ahead in key states where voting is expected to be close, which could work in his favour in the election.

It is hard to know what impact, if any, this conviction may have on Trump’s electoral prospects. So the conviction itself hasn’t led us to adjust our stance on US equities.

We remain positive on US equities against the backdrop of favourable US economic growth. And we remain positive on equities as a whole due to our expectations of strong growth in company earnings.

Robust performance from riskier bonds

Riskier bonds have performed more strongly than their lower risk counterparts in the year to 31 May 2024. Riskier ‘high yield’ bonds rose by 2.3 percent in the period, while emerging market bonds rose by 1.6 percent.

In contrast, lower risk developed market government bonds fell by 1.1 percent in the year to date. And high-quality (‘investment grade’) corporate bonds fell by 0.5 percent (4).

Bonds from some of the poorest nations have been the best performers in government bond markets this year. This has been driven by global economic resilience, higher oil prices (which benefited oil exporters Angola and Nigeria) and support from the International Monetary Fund (of benefit to Zambia and Sri Lanka).

Argentinian bonds also performed strongly, rising by 39 per cent year in the year to 9 May, due to President Javier Milei’s programme of austerity and deregulation (5).

We do, though, have a neutral stance on emerging market bonds (priced in local currencies). We believe US interest rates will be kept higher for longer, with a negative impact on both US and emerging market government bond prices. We have a neutral stance on government bonds overall.


(1) YouGov (, ‘Voting intention’, 31 May 2024.

(2) Schroders (, ‘What might the UK election mean for the economy and markets?’, 24 May 2024.

(3) Bayes Business School (, ‘Rt. Hon. Rachel Reeves MP delivers the 2024 Mais Lecture at Bayes Business School’, 22 March 2024.

(4) FactSet, 3 June 2024.

(5) Financial Times (, ‘Emerging market junk bonds are top performers in sovereign debt markets’, 9 May 2024.

Important information

The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

In preparing this article we have used third party sources which we believe to be true and accurate as at the date of writing but can give no assurances or warranty regarding the accuracy, currency or applicability of any of the contents in relation to specific situations and particular circumstances.

Any views expressed are our in-house views as at the time of publishing. This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without prior written content.

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