Domestically, the S&P/ASX 200 Accumulation Index was up 2.34% during the period. Financials (+4.4%) were the best performing sector. An increase in inflation expectations in the market saw pro-cyclical sectors outperform, with financials positively geared to a rising interest rate environment. Despite this, Healthcare (+3.5%) also outperformed, with sector heavyweight CSL (CSL +7.0%) recovering from post-COVID-19 lows. Information Technology (-9.9%) was the worst performing sector, with longer-duration stocks expected to suffer in a higher interest rate environment. Utilities (-7.0%) are also exposed to higher rates through their non-cyclical earnings profile, resulting in underperformance during the period.

International markets finished predominantly higher during the month. The Chinese market (CSI 300 +4.1%) was the standout performer, despite concerns about increased credit restrictions and its potential impact on economic growth. The other Asian markets also finished the period higher, with Korea (KOSPI +1.8%), Hong Kong (Hang Seng +1.5%) and Japan (Nikkei 225 +0.2%) all gaining. European markets (MSCI Europe ex UK +2.2%) had a strong month, with COVID-19 restrictions easing across the bloc, while the UK (FTSE 100 +0.8%) continued its vaccination rollout. US markets were the laggards in May as technology companies weighed on the major indices; the S&P 500 (+0.6%) outperformed the Nasdaq (-1.5%).

Disclaimer
This document has been prepared by DNR Capital Pty Ltd, AFS Representative – 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. It is general information only and is not intended to be a recommendation to invest in any product or financial service mentioned above. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and recipients must make their own enquiries concerning the accuracy of the information within. The general information in this document has been prepared without reference to any recipient’s objectives, financial situation or needs. Before making any financial investment decisions we recommend recipients obtain legal and taxation advice appropriate to their particular needs. Investment in a DNR Capital managed account can only be made on completion of all the required documentation.

Source: Motor Trader e-Magazine (June 2021) 

9 June 2021