Financial markets underwent a pressure through May amid unfavourable global trade conditions, and worries over the consequent impact on growth, the National Bank of Kuwait (NBK) said on Monday.
Major stock indices dropped around 7% worldwide during the month, while benchmark bond yields dived sharply, NBK said in its Economic Update report.
This was led partially by US President Donald Trump’s threat to levy tariffs on Mexican goods, from which he backed off later on.
The drop was also fuelled by the blacklisting of Chinese telecoms giant Huawei, prompting Beijing to slap US products with tariffs, leaving the chances of a trade pact between the world’s biggest two economies unlikely on the near term.
In addition, worries about deteriorating US-China trade ties were also felt in crude markets, as oil prices recorded their first monthly drop in May.
Global benchmark Brent futures fell by 11% month-on-month to $64.5 per barrel (pb) last May, having seen their biggest one-day sell-off in the year on 23 May.
The monthly drop came despite a higher geopolitical risk premium after attacks on Saudi oil carriers and pumping stations.
However, market fundamentals remained supportive for the commodity as the Organization of the Petroleum Exporting Countries (OPEC) and allied producers sustained their supply restraints, with compliance level seen at 150% last April, while output from Venezuela and Iran continued to tumble.