STOXX Global 1800 resumes gains in May as investors gauge inflation data, earnings

Stocks rose for the sixth month in seven in May, rebounding from losses in April, as investors continued to weigh the prospects for interest-rate cuts and amid higher-than-expected earnings reports. 

The STOXX^® Global 1800 index added 4.5% last month when measured in US dollars and including dividends^[1], taking its 2024 gain to 9.6%. The STOXX^® World AC index rose 4.1% in the month.

The Eurozone’s EURO STOXX 50^® added 2.4% in euros, while the pan-European STOXX^® Europe 600 climbed 3.5%^[2] to a record. The STOXX^® North America 600 rose 4.7% in dollars and the STOXX^® USA 500 increased 4.8%. The STOXX^® Asia/Pacific 600 advanced 1.8% in dollars. The STOXX^® Developed World rose 4.5% and the STOXX^® Emerging Markets gained 0.5%.

Figure 1: STOXX Benchmark indices’ May risk and return

_{Source: STOXX. Gross returns. Data as of May 31, 2024.}

Figure 2: STOXX Equity World indices’ May risk and return

_{Source: STOXX. Gross returns. Data as of May 31, 2024.}

Germany’s DAX^® added 3.2% in the month. MDAX^®, which gauges the performance of German mid-caps, increased 1.7%.  

Nvidia, Apple please investors

The US consumer price index (CPI) rose 0.3% in April, a slowdown from data in March and February, the Bureau of Labor Statistics said on May 15. However, US inflation was 2.7% in the twelve months to April, unchanged from a month earlier and meeting economists’ expectations, according to the personal consumption expenditures (PCE) price index.^[3] The PCE report also showed that consumer spending has slowed more than expected.^[4]

The corporate world provided a more bullish tone, as market bellwethers Nvidia and Apple jumped after releasing earnings reports with positive news for investors.  

Figure 3: Total annual % returns for STOXX World AC index

_{Source: STOXX. Gross returns.}

Figure 4: Select STOXX benchmarks’ returns since 2023

_{Source: STOXX. Gross returns in dollars except for STOXX Europe 600 Index, which is in euros. Data from Dec. 30, 2022, to May 31, 2024.}

Volatility dips 

The EURO STOXX 50^® Volatility (VSTOXX^®), which tracks EURO STOXX 50 options prices, fell to 14.1 at the end of last month from 15.6 in April. A higher VSTOXX reading suggests investors are paying up for puts that offer insurance against stock price drops. The VDAX-New^®, which measures volatility in German equities, dropped to 13.8 from 14.6 in April. 

Factor investing

Among the STOXX Factor indices, Momentum was the leading signal last month, while Low Risk and Size underperformed (Figure 5). 

Figure 5: STOXX Factor (Global) indices’ May risk and return characteristics

_{Source: STOXX. Gross returns. Data as of May 31, 2024.}

Climate benchmarks

Among climate benchmarks, the STOXX^® Global 1800 Paris-Aligned Benchmark (PAB) rose 3.9%, as did the STOXX^® Global 1800 Climate Transition Benchmark (CTB). The PAB and CTB indices follow the requirements outlined by the European Commission’s climate benchmarks regulation.

Sustainability indices

The STOXX^® Global 1800 ESG-X index advanced 4.5% in the month. The STOXX^® ESG-X indices are versions of traditional, market capitalization-weighted benchmarks that observe standard responsible exclusions. 

Within indices that combine exclusions and best-in-class ESG integration, the EURO STOXX 50^® ESG index rose 3.3%. Germany’s DAX^® 50 ESG index (+3.7%)^[5], which excludes companies involved in controversial activities and integrates ESG scoring into stock selection, outperformed the benchmark DAX’s return in the month.

The STOXX^® Global 1800 SRI jumped 5.7%. The STOXX SRI indices apply a rigorous set of carbon emission intensity, compliance and involvement screens, and track the best ESG performers in each industry group within a selection of STOXX benchmarks. 

Finally, the DAX^® ESG Screened added 3.6% in the month. The index reflects the composition of the DAX benchmark minus companies that fail to pass norms-based and controversial weapons screenings, meet minimum ESG ratings or are involved in certain business activities considered undesirable from a responsible investing perspective. 

Thematics, dividend strategies

Thirteen of 35 STOXX^® Thematic indices outperformed the benchmark STOXX Global 1800 last month. The STOXX^® Global Digital Entertainment and Education Index was the month’s best performer following a 9.5% jump.

Most dividend strategies outperformed in May. The STOXX^® Global Maximum Dividend 40 (+6.7% on a net basis) selects only the highest-dividend-yielding stocks. The STOXX^® Global Select Dividend 100 (+5.6%) tracks companies with sizeable dividends but also applies a quality filter such as a history of stable payments.

Minimum variance

Minimum variance strategies had mixed performances last month. The STOXX^® Global 1800 Minimum Variance gained 4.9% and the STOXX^® Global 1800 Minimum Variance Unconstrained rose 1.8%. 

The STOXX Minimum Variance Indices come in two versions. A constrained version has similar exposure to its market-capitalization-weighted benchmark but with lower risk. The unconstrained version, on the other hand, has more freedom to fulfill its minimum variance mandate within the same universe of stocks.

^[1] All results are total returns before taxes unless specified.
^[2] Throughout the article, all European indices are quoted in euros, while global, North America, US, Japan and Asia/Pacific indices are in US dollars.
^[3] Reuters, “April PCE inflation not too hot, or cool,” May 31, 2024.
^[4] Reuters, “Dow has best daily gain for year; indexes up sharply for May,” May 31, 2024.
^[5] Figures in parentheses show last month’s gross returns.