May 2025 Market Update

Overview

Markets continued to rally after recent volatility, with UK investors seeing a 5.5% total return during May.

Markets appeared to grow increasingly confident that tariff announcements were unlikely to be followed through, at least in full, providing breathing room and allowing worst-case scenarios to be ruled out.

Further announcements and commentary from President Trump continued throughout the month however, creating uncertainty and holding markets back from their peaks.

Elsewhere economic activity appears to have mostly held up, with inflation moderating and GDP growth continuing at a modest pace. The exception to this has been consumer confidence, where rapidly rising inflation expectations have raised alarms. However this does not (yet) appear to have followed through to meaningfully weaker demand.

Government borrowing also came into focus during the month as a US tax cut package passed Congress, with ongoing high deficits being a notable feature.

Full update below…