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Monthly Review - May 2023

one year ago

QUICK LOOK
The Markets

May

0.2%

S&P 500

-3.2%

EURO STOXX 50

-5.4%

FTSE 100

-5.2%

CAC 40

-1.6%

DAX 30

-7.0%

BEL 20

-3.8%

FTSE MIB

-2.1%

IBEX 35

3.6%

TOPIX
   
 Source: Bloomberg 31.05.2023
The sun rises

The sun rises 

After decades in the doldrums, the Japanese stock market has roared back on to the hot list, hitting a 33 year high. And following six successive weeks of gains, international investors seem keen to join the rally. Veteran investor Warren Buffet has recently paid a visit. Why now? After years spent fighting deflation, the country has finally hit a period of benign inflation, including modest wage increases, which should stimulate the economy. And the head of the stock exchange has publicly called for companies to engage with shareholders, potentially transforming the profitability of corporate Japan and giving a significant boost to shareholder returns.

Pasta spirals

Pasta spirals

Headline inflation, which includes food and energy, is forecast to decline sharply towards year end. Indeed, the oil price has already begun to fall, but food price inflation is still soaring in some regions. Supermarkets in Europe have been accused of ‘greedflation’, that is taking advantage of rising prices to bump up their profit margins. Some governments have imposed price caps on staple foods, such as eggs and milk, and the Italian government has debated a cap on the price of pasta. Meanwhile, central banks remain vigilant over inflation, meaning a pivot to lower rates could still be some way off.

AI update

AI update

Google launched an AI-powered search engine, making it the latest tech giant to join the artificial intelligence party. In a bid to calm doubts about the reliability of artificially generated text, the Google version includes links to web sources, allowing verification of the facts. ChatGPT launched on the Apple app store, while its founder Sam Altman, appearing before a US Senate subcommittee, called for regulation of the generative AI sector. Meanwhile, BT (formerly British Telecom) announced plans to cut 40% of its workforce by 2030. A fifth of the jobs lost will be replaced by AI.

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