Trump announces trade deal with EU following months of negotiations
Investing.com -- The Nasdaq 100 led global tech benchmarks in May, gaining 8.8% and outperforming Europe’s STOXX Europe 600 Technology index, which rose 7.8%.
The rebound followed months of relative underperformance and was fueled by easing trade tensions and a wave of U.S.-Middle East economic deals.
“The Magnificent 7 rose +13.4%, the best month since May 2023,” Deutsche Bank (ETR:DBKGn) highlighted in a new report. The surge comes as optimism returned on the back of tariff relief and AI-driven investment activity.
The rally was further buoyed by strong U.S. macro data, improving sentiment toward trade, and a surge in crypto and AI-related stocks.
Nvidia (NASDAQ:NVDA) alone gained 24.1% in May, benefiting from its role in a high-profile AI partnership with Saudi Arabia and beating Q1 revenue expectations, while Google (NASDAQ:GOOGL) jumped over 8%.
Tesla (NASDAQ:TSLA) climbed just 0.4% during the month, but the stock surged roughly 46% since April, driven by “Musk’s renewed focus and reports that Tesla will launch AI robotaxis in June.”
But despite the strength, Deutsche Bank warns the outperformance may be short-lived. “We see this U.S. outperformance as temporary, with tariffs posing a larger burden for U.S. corporates relative to Europe,” the report noted.
While U.S. tech stocks rebounded sharply after the May 12 U.S.–China détente, policy risk remains elevated. A U.S. court temporarily blocked new tariffs only for another ruling to reintroduce them, and export restrictions on semiconductors persist.
The broader sector also saw gains. All tech sub-industries posted positive returns in May, with hardware leading the pack at +11%, while IT services remained the weakest year-to-date despite a May bounce.
Semiconductors recovered, lifting the Philadelphia Semiconductor Index (SOX) index 12.5% higher, but concerns around export controls—particularly after fresh U.S. restrictions on chip design software—cloud the outlook.
Although the rally reflects strong AI capex momentum and a temporary policy relief rally, downside risks remain. Deutsche Bank highlights potential trade war escalation and investor concerns over “erratic policy signals and May’s Moody’s downgrade” as threats to sustained momentum.
For now, the Nasdaq rally marks a strong recovery, but its staying power may depend on how quickly policy uncertainties resolve and whether the AI-led momentum can remain resilient amid ongoing geopolitical risks.