Global stock markets rally, but Trump's next post could flip the script

Global stock markets roared back in May, staging a spectacular turnaround from the extreme volatility and negative returns that rattled most developed equity markets in April.

But uncertainty still looms large. UniSuper head of fixed interest David Colosimo says that just one Truth Social post from US President Donald Trump could trigger market volatility.

Colosimo noted that US shares climbed 6% in May, their strongest month in over a year, after skidding nearly 19% from February highs in April.

Meanwhile, Australian shares increased nearly 4%, European markets advanced 4%, Japanese shares lifted 5%, and Chinese shares edged up 2%.

While some sectors outperformed others, Colosimo said the gains were "broad-based."

In the US, only healthcare posted a decline, while all other sectors rose.

In Australia, every sector finished the month higher.

Colosimo said there were several factors that drove markets higher; first on the checklist was the Trump administration's action around tariffs.

"... as far as markets are concerned, a sharp increase in tariffs - it's not good for growth, it's not good for inflation, and it's not good for company earnings," he said.

But, he said, the news in May was toward less rather than more tariffs.

"The big one there was the negotiation of a 90-day pause with China," he said.

"That reduced tariffs on both sides by more than 100% with a view to a more meaningful deal in the next few months. That was followed by a similar pause with Europe."

The market, he added, was also encouraged by a more supportive fiscal environment, with Trump's 'Big Beautiful Bill' leaning towards bigger, rather than smaller, deficits.

"Most people see that if the budget's going to stay quite supportive, then the economy's likely to stay resilient, and that's been an overall positive for the market," he said.

This month, however, he said tariffs will remain the focus.

He said the market's probably "too complacent about the risk of more tariffs," and that "there's still a lot to play out."