Global week ahead: Is 'Sell in May' just a myth?

Conventional wisdom can be a stubborn force. As the trading month of May gets into full swing this week, should investors continue to follow the old adage of 'sell in May and go away' — a strategy of selling stocks in May and re-entering the market in November to avoid low returns and low volumes during the northern hemisphere's summer? Testing traditional trades: If April is anything to go by, investors could risk leaving returns on the table if they step out of stocks now. Europe's STOXX 600 and Germany's DAX just closed their best month since January of last year, while Italy's FTSE MIB put in an even better performance, with a near-9% rally marking the strongest month since January 2023. Stateside, the S&P 500 and Nasdaq have logged their best monthly performances in around six years. A lot of this comes down to the Trump administration changing the game for investors. A potential resolution to the war in Iran could boost equities this spring, while major stock markets across the globe have remained remarkably resilient throughout the unrest in the Middle East. In recent years, investors who sold in May and went away missed out on sharp advances. JPMorgan's trading desk pointed out that, over the past 10 years, the S&P 500 has averaged a return of 1.5% in May and a 1.9% pop in June. Returns are even stronger in July at an average of 3.4%. Deutsche Bank has analyzed the 'sell in May' strategy in Europe. For the Stoxx 600, the strategy underperformed a straightforward Buy and Hold in 25 of 39 years, offering no statistical edge. Investors may want to stay more agile in May, as the coming weeks bring a slew of earnings from European companies. Big banking names like Unicredit, HSBC, and Commerzbank will issue numbers, while energy giant Shell and pharma group Novo Nordisk will also dominate headlines. Risk factors: Despite record-breaking stock performance, central banks remain cautious. Federal Reserve Chair Jerome Powell noted that inflation remains elevated, ECB President Christine Lagarde warned about supply shocks, and the Bank of England painted a troubling worst-case scenario for inflation. Investors must weigh traditional trades against unconventional strategies, as Deutsche Bank concludes the 'Sell in May' strategy offers no more certainty than a coin toss. What to watch this week: - Monday: U.K. market holiday, April PMI data from across Europe - Tuesday: Earnings from Unicredit, HSBC, AB Inbev, Ferrari, and AMD - Wednesday: Earnings from Novo Nordisk, Infineon, BMW, Diageo, and Disney - Thursday: Earnings from Shell, Rheinmetall, Maersk, BMPS, and AirBnB - Friday: Earnings from Commerzbank, IAG