North America

  • For a third month running, investors around the world chose to interpret evidence of a deceleration in the rate of economic decline as a sign that a recovery might not be too distant. Better than expected GDP figures, a slowing rate of job losses and improving consumer confidence boosted investor sentiment. Even so, the numbers would make harrowing reading in more prosperous times.

  • Onlookers were cheered by May figures which showed the US economy had contracted by 5.7% in the first three months of the year as prior estimates had forecast a drop of 6.1%. Meanwhile, US consumer confidence rose to its highest level since last September.

  • Although US unemployment continued to rise, it did so at a slower pace than in recent months. It rose to 9.4% in May with the 345,000 job losses recorded only equal to around half of the average monthly decline seen over the previous six months. There were also some positive signs in the beleaguered US housing market. Despite US house prices falling by 19.1% in the year to April, according to the S&P/Case-Shiller Index, existing home sales rose, suggesting that lower prices might be tempting buyers back to the market.

  • Meanwhile, after months of speculation, the US car giant General Motors filed for the largest ever industrial bankruptcy shortly after the month end, leaving 72.5% of the company in the hands of the US and Canadian governments.

  • Against this backdrop, the FTSE All-World North America Index (which includes Canada), marginally underperformed the global average; it returned 6% over the month, compared to the FTSE All-World return of 6.7%, in local currency terms. The financial, oil and gas and basic materials sectors led the way, with the financial heavyweights Wells Fargo, Bank of America and JPMorgan Chase notable outperformers. By contrast, the telecoms sector was one of the few to end the period in negative territory.

  • With investor risk appetite remaining robust, the US yield curve steepened considerably with 30-year US government bonds delivering a loss of 4.3% as investor demand for “safe-haven” assets subsided.




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