After three months of subdued performance, global equities rebounded strongly in May. South African financial markets extended their upward trend in May 2025, supported by a temporary pause in U.S.-China tariffs, easing market volatility. The 90 day pause in the U.S.-China tariff conflict in mid-May gave Chinese stocks a short-term boost. However, they lost steam, as attention turned to weaker than expected earnings from major technology companies. Despite the strong bounce back in sentiment toward US equities, we maintain our neutral stance, mindful of elevated valuation risks. The so-called “TACO theory”—that Trump Always Chickens Out—has fuelled a risk-on attitude, yet this sentiment appears disconnected from underlying fundamentals.