Signia Invest Insights | April 2024
Market Review and Outlook
April marked a notable change in tone following a spectacular start to the year in Q1, as investors’ concern grew about sticky US inflation and rising geopolitical tensions in the Middle East with direct attacks from Iran and Israel on each other’s territories. Although that helped safe haven assets like gold and the US Dollar, it also meant the S&P 500 fell back -4.2% after 5 consecutive monthly gains since October last year. It was actually the index’s second-worst monthly performance since December 2022, around the time the S&P had seen a peak-to-trough decline of -25%. Meanwhile, one of this year’s best performing stock markets in local terms, Japan, lost almost -5% during the month, reducing this year’s gains to 14.8%, on the back of investors taking profits after a record-breaking rally driven by a weakening Yen to 160 versus the US Dollar (weakest since 1990) as the Bank of Japan left their interest rates unchanged in April after raising them in March, and a continued positive outlook overall for Japanese corporations.
We had expected some profit-taking, and recent news-flow underlining the force of reflationary trends provided the necessary excuse for investors to take some money off the table. As a result, the MSCI All Country World equity index shed nearly half its gains for the year, losing -3.9% in April leaving it up 4.3% for the year. The S&P 500 was amongst the most significant detractors globally during the month, however, some other equity markets came back to life as the FTSE 100 broke out to new highs (finally!), gaining 2.4% against a broader weak market trend leaving it up 5.3% year-to-date. With an index composed of 19% in financials, 16% consumer staples and 14% each in industrials and energy, it did not require any tech stock to move the index out of its misery. In fact, technology and communications only make up 1% and 3%, respectively, of the UK large cap index.
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