Global stock markets lost $2 trillion in May
May was a rough month for global stocks. Worries about the US waging a second trade war pushed markets lower.
Global stock markets lost over $2 trillion in value in the month of May. The escalating trade conflict between the United States and China, coupled with the possibility that the US may impose tariffs on Mexican goods, is bringing new worries of a trade-related global economic slowdown.
The Trump administration now says it will impose a 5 percent tariff on Mexican goods beginning June 10. The tariff would then be increased to 25 percent until “illegal immigration” across the countries’ border is stopped.
Trump tweeted the decision late on Thursday, catching markets by surprise.
The American stock index known as the S&P 500 dropped 1.3 percent bringing its total loss for May to 6.6 percent. This is roughly equivalent to about $1.6 trillion of its market capitalisation, according to Datastream, a database for financial and economic research.
MSCI, a global provider of market analysis and financial services products, showed stocks across the globe lost 0.8 percent of their value on Friday, bringing its monthly loss to 6.2 percent. According to Datastream, this is roughly $2 trillion.
“The more that we worry about additional tariffs being laid on when we haven’t even resolved the initial tariff issues we’re having with China, it’s just negative overall for global markets,” warned Saira Malik, head of global equities at Nuveen, a global investment manager with almost $1 trillion under management.
Japan’s Nikkei index and MSCI’s Asia Pacific index, excluding Japan, each fell almost 8 percent for the month of May, underscoring the region’s sensitivity to global trade.
The pan-European STOXX 600 index lost 0.8 percent on Friday and ended down 5.7 percent for the month, its deepest monthly drop since January 2016.
“The latest tariff threat with Mexico was quite unexpected, as we’ve been hearing how well discussions have been going with both Canada and Mexico,” Ryan Detrick, senior market strategist for LPL Financial told Reuters news agency. “The big question at the end of the day though is can we really fight two trade wars at the same time?”