Stocks jumped the most in 1½ years in May after the US and China agreed to pause import tariffs as both nations negotiate a reduction in trade costs. European indices extended this year’s rally on expectations the region may be spared the worst effects of increased export duties to the US.
The STOXX® World AC index climbed 5.8% in dollars last month, including dividends, erasing this year’s losses. It was the steepest monthly advance for the benchmark since November 2023. The STOXX® Global 1800 index climbed 6% in May.
The Eurozone’s EURO STOXX 50® added 5.4% in euros in the month[1], while the pan-European STOXX® Europe 600 rose 5%. Germany’s DAX® increased 6.7%. MDAX®, which gauges the performance of German mid-caps, jumped 6.5%.
The STOXX® North America 600 added 6.5% in dollars and the STOXX® USA 500 rose 6.6%. The STOXX®Asia/Pacific 600 jumped 4.2%. The STOXX® Developed World climbed 6% and the STOXX® Emerging Markets gained 4.6%.
Figure 1: STOXX Equity World indices’ May risk and return
Figure 2: STOXX Benchmark indices’ May risk and return
Figure 3: DAX indices’ May risk and return
| For a complete review of all indices’ performance last month, visit our May index newsletter. |
Trade talks continue
American and Chinese officials agreed on May 12 to drastically reduce levies on each other country’s imports for 90 days, as they negotiate to bring down reciprocal import tariffs that US President Donald Trump has set as high as 145%.[2] On May 25, Trump extended by more than a month a deadline to discuss tariffs with the European Union, showing a more conciliatory position only days after he had threatened to impose 50% duties on European exports to the US.[3]
The STOXX World AC index fell as much as 16% this year as Trump announced an initial set of new tariffs.
Figure 4: Total annual % returns for STOXX World AC index
Figure 5: Select STOXX benchmarks’ returns since 2023
Volatility eases slightly
The VSTOXX® (Eurozone equity volatility), which tracks the prices of EURO STOXX 50 options traded on Eurex, slipped to 19.2 in May from 22.5 in April. A higher VSTOXX reading suggests investors are paying up for puts that offer insurance against stock price drops. The VDAX®, which measures volatility in German equities, dropped to 20.5 from 23.4 a month earlier.
Factor investing
Among the STOXX Factor indices, the Momentum signal led gains last month and it’s now the leading signal for 2025, followed by Multi-factor (Figure 6).
Figure 6: STOXX Factor (Global) indices’ May risk and return characteristics
Climate benchmarks
Within climate benchmarks, the ISS STOXX® Developed World Net Zero Transition added 5.5%. The index is focused on net-zero targets and real-world transition-aligned metrics, and includes all industries featured in the parent universe.
The STOXX® Global 1800 Paris-Aligned Benchmark (PAB) rose 4.7%, while the STOXX® Global 1800 Climate Transition Benchmark (CTB) gained 4.8%. 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 rose 5.8% in the month. The STOXX® ESG-X indices are versions of traditional, market capitalization-weighted benchmarks that observe standard responsible exclusions.
The DAX® ESG Screened increased 5.8%. 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.
Within indices that combine exclusions and best-in-class ESG integration, the EURO STOXX 50® ESG index rose 5.4% over the month. Germany’s DAX® 50 ESG index (+6.1%)[4], which excludes companies involved in controversial activities and integrates ESG scoring into stock selection, underperformed the benchmark DAX in the month.
The STOXX® Global 1800 SRI added 3.1%. The STOXX SRI indices apply a 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.
Thematics, digital assets
Twenty-five of 42 STOXX® Thematic indices outperformed the benchmark STOXX Global 1800 last month. The STOXX® Europe Targeted Defence (+16.5%), which was introduced at the end of April, had the best performance in the suite.
The STOXX® Digital Asset Blue Chip index, which aims to track high-quality assets that represent the crypto universe today, jumped 21.6% in the month.
Dividend strategies
Dividend strategies had strong performances in the month that ended. The STOXX® Global Maximum Dividend 40 (+6.4% on a net basis) selects only the highest-yielding stocks. The STOXX® Global Select Dividend 100 (+4.7%) tracks companies with sizeable dividends but also applies a quality filter such as a history of stable payments.
Minimum variance
Minimum variance strategies underperformed. The STOXX® Global 1800 Minimum Variance rose 4.3% and the STOXX® Global 1800 Minimum Variance Unconstrained gained 1.7%.
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] Throughout the article, all European indices are quoted in euros, while global, North America, US, Japan and Asia/Pacific indices are in US dollars.
[2] BBC, ‘Trump says US-China relations ‘reset’ as markets surge on tariff pause,’ May 12, 2025.
[3] BBC, ‘Trump agrees to extend EU trade talks after 50% tariff threat,’ May 25, 2025.
[4] Figures in parentheses show last month’s gross returns.