The themes of recent weeks again impacted financial markets in April: the war in Ukraine, rising inflation and interest rates, and lockdowns in China due to the coronavirus. Investors perceived this as a “perfect storm,” and without much significant news, stocks in particular suffered again. Company figures for the first quarter were generally well received, but could not push prices higher. Commodity prices rose further under pressure from the sanctions against Russia. The exception, however, was gold. The precious metal has a negative relationship with interest rates, which continued to rise this month across all maturities.
Shares
The MSCI World broad equity index fell 3% last month. Once again, the differences between countries and regions were very large. For example, the Netherlands made a negative return of -5.2%, while Spain’s index rose 2.7%. Emerging markets fared better this month with a loss of only 0.4%. Value stocks (+0.1%) significantly outperformed growth stocks (-6.3%) this month. And energy and utilities also did well this month because of high oil and energy prices. The information technology sector (-6.9%) again did not fare well in April.
Bonds
Interest rates continued to rise across all regions and all maturities in April. US 10-year interest rates rose 0.60% to 2.94%. German 10-year rates rose slightly less: by 0.39% to 0.94%. Investors are closely following statements by central bankers in the US and suspect that US policy rates may rise by 0.75% instead of the calculated 0.5%. The risk premium for lower-risk and higher-risk corporate bonds rose to 1.50% (+0.21%) and 4.51% (+0.39%) respectively, yielding negative returns for the month of April.