After a particularly volatile April, equity markets rebounded sharply in May, buoyed by a global economic improvement and a return of risk appetite following the Trump administration's announcement of a further 3-month tariff pause. The MSCI World rose by +5.9%, led by the US indices where the S&P 500 gained +6.3% and the Nasdaq +9.1%, buoyed by resilient economic activity and a reassuring earnings season. In Europe, performances were more measured but remained solid, with the Euro Stoxx up +5.7% and the Stoxx 600 up +5.1%.

The macroeconomic climate was dominated by renewed confidence in the United States, with the labor market remaining resilient (+177,000 new jobs). The decline in the risk of recession (probability down to 35%) and improved consumer confidence fuelled optimism. Nevertheless, inflation forecasts remain tense, with CPI expected to exceed 3% as early as May and potentially reach 4% by the end of the year. Although under pressure, the Fed did not change rates in June, suggesting that the tightening cycle is not yet over.

In Europe, the ECB cut its key rates by 25 basis points, a signal of easing offset by a cautious message about the future pace of cuts. Economic activity remains sluggish, but leading indicators suggest that German stimulus plans will have a positive impact in the medium term.

The month's good performance should not mask the uncertainties that remain, notably the debate over the US budget and the customs threats against Europe reiterated at the end of the month. Congress narrowly approved the Trump administration's budget plan, a highly inflationary program that could put pressure back on long-term yields (10-year US at 4.4%).

Finally, the 1st quarter earnings season proved solid, with nearly 80% of US companies and 59% of European companies reporting above expectations. These good results tend to reinforce the scenario of a soft landing, although a rise in costs linked to customs duties remains to be monitored.

Against this backdrop, the fund posted a monthly performance of 4.42%, compared with 5.66% for its Euro Stoxx NT benchmark, giving a positive relative performance of -124.

Over the month, the main relative outperformances of the stocks in the portfolio (versus Euro Stoxx) were : Springer Nature (+16bps, active weight +1.2%), Infineon (+14bps, active weight +1.2%), Schneider Electric (+10bps, active weight +2.5%) and ASML (+10bps, +1.7%). Conversely, the worst relative performers were : RELX (-27bps, active weight +4.8%), Rational (-20bps, active weight +2.4%), Astrazeneca (-18bps, active weight +3.5%), Lonza (-14bps, active weight +1.5%) and Air Liquide (-14bps, active weight +4.2%).

Among our main moves, we initiated a line in Vonovia. The German company's domestic exposure, specializing in German housing, offers us protection against US tariffs. Revenue growth is highly visible and the valuation attractive. We also strengthened our positions in Kingspan and SAP. These moves were financed by reductions in Bureau Veritas, Klepierre, Dassault Systèmes, RELX and Air Liquide.

At the end of the month, the portfolio comprised 43 stocks. The top 5 include the following stocks: ASML (>5.5%), Schneider Electric (>4.0%), RelX (>4.0%), Siemens (>3.5%) and Astrazeneca (>3.0%).

We note two points of vigilance: currency effects, notably the dollar, and the lack of visibility on the annual outlook. It is highly likely that second-quarter publications will be a better indicator of business trends and profitability. With an investment ratio that has been reduced to around 95%, the management team will continue to take advantage of the episodes of volatility that are likely to emerge as a result of the US administration's announcements.