Global Market Update: May 2025 Market Commentary for Long-Term Investors

As we closed out May 2025, global markets continued their quiet navigation through a complex economic landscape. Volatility persists, but beneath the surface, many trends remain consistent, making this an ideal moment for expats in Germany to recalibrate their long-term financial strategy with steady hands. At LeX-Wealth, our macro strategy remains clear: stay diversified, stay informed, and stay the course. 

United States: Holding the Line Amid Cautious Optimism 

The Federal Reserve maintained its interest rate stance at the May meeting, continuing to signal a 'wait and see' approach in light of sticky inflation and a still-resilient labour market. While headline CPI in May cooled slightly to 3.3%, core inflation remains above the Fed’s comfort zone. Unemployment held steady at 3.9%, indicating a labour market that’s easing gradually but not collapsing. 

Corporate earnings surprised modestly to the upside in Q1, with strong performance in tech and consumer discretionary. However, fiscal gridlock continues in Congress, limiting the scope for new spending initiatives. Meanwhile, U.S.-China trade tensions showed subtle movement, with minor tariff discussions resurfacing around key tech components. 

What this means for long-term investors: Temporary inflation bumps may cause market jitters, but a patient, diversified allocation, especially across U.S. and international equities, remains a prudent foundation. 

United Kingdom: Navigating Recovery, One Step at a Time 

The Bank of England reduced rates to 4.25% in May, emphasizing caution amid signs of a subdued but stabilising economy. Services inflation remains sticky, but energy and food prices have moderated, offering relief to households. Post-Brexit trade frictions persist, particularly with EU financial services, though small steps toward normalisation are underway. 

Expats with UK-linked pensions or property should note: while growth is tepid, stability is slowly returning, making now a good time to revisit long-term pension transfer strategies or inheritance planning. 

What this means for long-term investors: For those with UK exposure, a rebalance may be worth exploring, especially through tax-efficient savings or pension schemes tailored for expats. 

Eurozone: Germany’s Growth Balancing Act 

The ECB held interest rates steady in May, though market watchers are eyeing a possible cut in June. Inflation across the euro area grew to 2.6%, and Germany continues to grapple with uneven industrial recovery and weak export demand. Energy transition efforts remain central to the German economic strategy, with notable fiscal debates around green investment versus debt constraints. 

Geopolitically, EU-China trade talks have resumed, particularly around electric vehicles, which could have downstream effects on German auto exports. 

What this means for long-term investors: Diversification across sectors, including clean energy, is wise. German property remains stable, but income protection and health insurance continue to be essential tools for expat stability. 

China: Recalibrating in the Face of Structural Challenges 

China reported Q1 GDP growth at 5.4% year-on-year, slightly above target but consistent with a gradual recovery. The property sector remains a drag, with defaults among developers continuing, despite fresh central government stimulus. Consumer spending showed signs of life in May, but trade data painted a mixed picture, with exports slightly up and imports lagging. 

Geopolitically, China’s positioning has become more assertive, particularly in relation to Taiwan and rare earth trade controls. While not alarming for diversified portfolios, these shifts warrant monitoring. 

What this means for long-term investors: Exposure to China should be tactical and monitored, ideally via global funds. Balanced allocations across emerging and developed markets continue to offer the best long-term outcome. 

Emerging Markets: Shifting Sands, Growing Potential 

India remains a bright spot, with sustained investment in infrastructure and a growing middle class. Brazil showed renewed momentum with rate cuts to stimulate growth. ASEAN nations are benefiting from supply chain shifts away from China, while the Middle East continues to invest in diversification beyond oil. 

Debt risks in select frontier markets persist, particularly where dollar-denominated loans create fiscal strain. 

What this means for long-term investors: Exposure to EM via blended funds or global ETFs can smooth volatility. It’s wise to pair higher-growth regions with core allocations in developed markets. 

Asset Snapshot: Equities, Bonds, Property & Commodities 

Global equities were mostly flat in May after a strong Q1. Bonds saw a mild rally, with yields on 10-year U.S. Treasuries easing slightly to 4.4%. German property remained stable, though sentiment is cautious in commercial real estate. Oil prices hovered around $82/barrel, supported by OPEC+ cuts and Middle East tensions. Gold climbed to $2,320/oz, as investors hedged geopolitical risk. 

What this means for long-term investors: While markets may pause after strong quarters, staying invested across asset classes—including equities, bonds, and commodities—supports long-term resilience. Gold and bonds can act as stabilisers during uncertainty, while property and equities offer growth over time. It’s a good moment to review your portfolio’s diversification and ensure your broader plan, from retirement goals to protection strategies like income cover or term life insurance, is aligned with your risk tolerance and future needs. 

Global Headlines: What You Might See in the News 

‘Markets wobble on inflation fears.’ ‘China slows, again.’ ‘Germany debates green transition.’ These stories may dominate headlines, but remember: the day-to-day noise rarely defines the long-term outcome. At LeX-Wealth, we help expats focus on steady progress, not panic. 

Looking Ahead with Confidence 

At LeX-Wealth, we support your expat journey with clear insights and tailored services, from retirement planning and tax-efficient savings, to junior education savings and health insurance. Our commitment to long-term financial security never wavers, no matter the headlines. 

Explore our services or get in touch for a free consultation. Your financial future deserves more than headlines, it deserves perspective. 

This commentary is intended for informational purposes only and does not constitute financial advice.