Monthly Market Roundup cov. April 2022

Growth in Europe and US was slower than expected last month, which meant European equities ended lower. Uncertainty around the Russia-Ukraine conflict continue to trouble this market

Of the four big economies, Eurostat data showed that Italian output slowed, French output was stagnant while Germany and Spain grew moderately. Inflation has now hit 7.5%, largely driven by food and energy prices.

In politics, the much-anticipated French election ended with the expected result, a victory for Emmanuel Macron. 

The UK equity market ended marginally higher last month, in contrast with the rest of the world. But record-high inflation (now 7%) continues to be the theme, with pressure growing on the Bank of England to further increase interest rates.

GDP grew 0.1% between January and February, lower than the 0.3% estimate. Unemployment rates dropped to pre-pandemic levels leading up to February, though salaries failed to keep pace with inflation as the cost-of-living crisis wages on.

In the US, equity markets suffered, with the major indices (the S&P 500, the Dow Jones Industrial Average and the NASDAQ composite) all falling in value. Inflation hit 8.5%, driven largely by gas prices.

An increase in the cost of labour meant that a 0.5% interest rate hike was hotly anticipated in April (and was finally announced in recent days).

In tech, The FAANG group (Facebook (Meta), Apple, Amazon, Netflix and Google) had mixed fortunes, while Elon Musk’s purchase of Twitter saw the company’s value rise, despite strong initial opposition.

Increasing lockdowns in China due to Omicron, global interest rates and slowing economic growth hit Asian equities in April. The lockdowns in major Chinese cities dampened investor sentiment and impacted performance across Hong-Kong, Taiwan and Korea.

Indian equities, though faring better than the rest of the region, were also weak. Utilities were among the strongest performers here.

Japanese equities and the yen suffered as the Bank of Japan reiterated loose monetary policy (lower interest rates). This stance is in stark contrast with most other central banks. 

Equities in emerging markets (EM) fell as they priced in ongoing global uncertainty. The Russia-Ukraine conflict, Chinese lockdowns and the threat of faster interest rate hikes from the US Federal Reserve were the main culprits.

Latin American markets reversed months of outperformance and corrected down in April. The region still tops year-to-date performance though. Peru performed the weakest, whilst Turkey led the way by far, with a strong advance from its equity market.

April was a difficult month for fixed income. The bond market suffered as corporate and sovereign bonds suffered amid a hostile inflationary environment. This is putting increasing pressure on central banks to be more aggressive in raising interest rates.

US treasuries recorded a fifth straight loss, while UK gilts and German bunds also fell. The US economy shrank, and the Russia-Ukraine conflict continues to weigh on the eurozone.

In the UK, tough conditions meant consumer confidence slumped to almost a 50-year low.