The page you were trying to view is not available for your role.
In order to aid your understanding, the underlined terms are hyperlinked to definitions in our online investment glossary.
Our market summary
May proved to be a strong month for global markets, as easing geopolitical tensions fed through to lower energy prices and improved sentiment. Hopes of progress in the Middle East drove a sharp fall in oil, helping to reduce inflation concerns. Together with a strong end to first quarter earnings season, this provided support to risk assets. Against this backdrop, global equities moved higher, with the MSCI AC World Index rising 6.1% in sterling terms. Bonds were more volatile, with yields rising earlier in the month before falling back as inflation expectations eased, leaving returns modestly positive overall.
US
US equities delivered solid gains, supported by continued strength in growth sectors. The MSCI USA Index rose 6.1% in sterling terms, with technology and AI‑related companies once again leading the market, although with clear selectivity and questions remaining over capital expenditure plans. Economic data remained resilient, reinforcing expectations that growth can continue without triggering a material deterioration in inflation. As a result, investor confidence improved, despite some mid-month volatility in bond markets.
Europe
European equities also advanced, though performance was more moderate than in the US. The MSCI Europe ex UK Index returned 4.5% over the month. Markets benefited from the global risk-on backdrop and easing inflation concerns, although gains were tempered by ongoing uncertainty around growth momentum and interest rates. Within the region, growth stocks outperformed, reflecting a broader global trend.
UK
The UK lagged other developed markets, with the MSCI UK Index delivering a more modest return of 0.5%. The market’s heavier exposure to energy and healthcare stocks weighed on performance. Domestic factors also remained in focus, including political uncertainty and sensitivity to interest rate expectations. However, returns remained positive, supported by the consumer and basic materials sectors.
Japan
Japanese equities continued their strong run, rising 5.8% in sterling terms. As an energy importer, the market benefited from signs of the Middle East conflict easing, as well as signs of improving economic momentum and positive earnings announcements. Japan’s exposure to global growth and cyclical sectors positioned it well to take advantage of improving sentiment.
Emerging markets
Emerging markets were among the best performers in May, with the MSCI Emerging Markets Index gaining 10.6%. Strength was driven largely by Korea and Taiwan, technology-focused markets that benefited from the continued enthusiasm around artificial intelligence and related hardware. However elsewhere performance was weaker, as a slow Chinese consumer economy continued to provide headwinds.
Fixed income
Fixed income markets experienced a mixed but ultimately positive month. Yields rose to multi-year highs earlier in May before declining as oil prices fell and inflation concerns moderated. UK gilts delivered a return of around 2.0%, while sterling corporate bonds also gained close to 2.0%. Global bonds were more subdued, with the Bloomberg Global Aggregate (GBP hedged) returning 0.6%. Credit markets held up well, supported by the improved risk backdrop and ongoing demand for income.
Source: Quilter as at 31 May 2026. Total return, percentage growth over period 30 April 2026 to 31 May 2026. Equities are represented by the appropriate MSCI index, the Magnificent Seven is represented by the Roundhill Magnificent Seven ETF, UK gilts is represented by the ICE BofA UK Gilt Index, US Treasuries is represented by the ICE BofA US Treasury (GBP Hedged) Index, global government bonds is represented by the Bloomberg Global Aggregate Government - Treasuries (GBP Hedged) Index, and global corporate bonds is represented by the Bloomberg Global Aggregate - Corporate (GBP Hedged) Index.
Performance review
May was another positive month for risk assets led by Japanese equity, Emerging Market equity and then the Nasdaq index. Government and corporate bonds were mildly positive in this environment as well, while the key loser for the month was oil. As with other recent periods there was not a linear return through the month, with volatility reflecting shifting tensions in the middle east, political twists, or late night 'truths' from the President of the United States.
Against this backdrop the portfolios were able to generate positive returns ranging from 1.9% for risk level 3 up to 6.7% for risk level 10.
The performance figures shown refer to past performance. Past performance is not a reliable indicator of future performance.
Investment outlook
From the performance summary above we can conclude that geopolitical tension was deemed to have diminished through the month with a view that the ceasefire in Iran may hold and a longer-term resolution may be found. Having added risk in the March rebalance, the portfolios were able to capture this, and this leaves us pondering whether the situation in the middle east will be as easy to resolve.
Resolution or escalation?
If there is a resolution, we can envisage a bullish broadening within risk markets and a rally in bonds; a breakdown will likely lead to higher oil prices, higher inflation, and higher interest rates, which could lead to a more challenging environment overall. Earnings growth has continued to be positive but the impact of the disruption in the middle east was likely to be felt with a delay, and next quarter’s results will be key to this story.
Key events on the horizon
Other areas of interest are the upcoming by-election in Makerfield and (whether Burnham succeeds there or not) if a leadership challenge is mounted within the Labour Party, as well as the impending trio of IPOs - SpaceX, Anthropic, and OpenAI. Assuming all proceed, we will be maintaining a close watch on the performance of these names in the first few days and weeks and the potential read across to wider markets. As Deutsche Bank’s Jim Reid wrote in his recent world outlook ‘...it feel(s) like 1999 meets 1990, but hopefully not 1973.’
Markets pause for breath
With such disparate geopolitical outcomes alongside the very strong performance in parts of the market, we believe the market might need to take a pause for breath while bonds will be sensitive to the political situation at home and the direction of inflation and inflation expectations. Kevin Warsh’s first FOMC meeting will be closely monitored not just for the outcome but the level and tone of any messaging that follows.
Stuart Clark
Portfolio Manager
Helen Bradshaw
Portfolio Manager
Bethan Dixon
Portfolio ManagerSolutions
View the full range of multi-asset investment solutions offering a choice of outcomes at different risk and diversification levels.
Important Information
The value of investments can fall as well as rise. You might get back less than you invested.
This communication is issued by Quilter, a trading name of Quilter Investment Platform Limited and Quilter Life & Pensions Limited, who provide the WealthSelect Managed Portfolio Service.
Approver: Quilter June 2026
QIP 23845/29/ 17192
