April in review

April was the first difficult month of the year for global equities. The S&P 500 fell back from its record high after five straight monthly gains, with Europe also coming under pressure, as was the case in Japan. Much of this was down to evidence of persistent US inflation, which added to the “higher for longer” narrative amid concerns the Federal Reserve (Fed) might not cut rates at all this year. The situation in the Middle East remained fraught, weighing on the appetite for risk. Emerging markets had a stronger month, led by China. Commodities rallied.

The major driver of macro concerns was a swathe of strong economic data, putting pressure on the Fed and leading traders to roll back bets for the number of cuts expected this year. March’s jobs report showed nonfarm payrolls were up by +303k, and the inflation print a week later showed core CPI was up for a third straight month, rebutting prior suggestions that the stronger prints in January and February were anomalies in the broader downward trajectory.

At the sector level, the real estate sector was the biggest laggard given the prospect of rates remaining elevated, while 2024’s standout IT sector also fell back. The energy space outperformed on the back of Middle Eastern tensions, as did utilities.

Source: Bloomberg, for the month ending 30 April, 2024.