Unfortunately, the positive line of the first quarter could not be continued in April. A combination of further geopolitical tension in the Middle East (this time in the form of a conflict between Iran and Israel) and higher than expected inflation in the U.S. pushed financial markets lower. Belief in interest rate cuts by the Fed is waning and if they will take place, they will be lower in number and height. It was also notable that the central bank of Japan intervened to prevent the yen from falling.
The US dollar and gold prices picked up further and the commodity index also headed higher for the month (+5.2%).
Shares
So after a fine first quarter now negative returns for most equity markets in April. The broad MSCI All Countries World Index (developed + emerging markets combined; measured in euros) achieved a negative return of -2.3%. Remarkably, emerging markets did much better than developed markets and even managed to post a plus (+1.5%). The negative return of developed markets was -2.7%. North America (-3.2%), with a heavy weighting in this index, has a large share in this. Japan was the only region to do even worse in April (-3.9%). Europe (-0.9%) and Pacific excluding Japan (-0.2%) stayed closer to home. Among emerging markets, we saw only one region posting negative returns: Latin America (-2.5%). Positive returns were recorded by the remaining regions. China (+7.7%) led proudly. Asia (+1.9%) and EMEA (+1.2%) eased slightly. Style growth stocks (-2.0%) lost slightly less ground than style value stocks (-2.6%).
Bonds
In most regions and across all maturities, capital market interest rates rose in April. In the U.S., the increase was greater than in Europe. U.S. 10-year rates rose as much as 0.48% to 4.68%. The 10-year rate on German government bonds rose less sharply in April: 0.29% to a level of 2.58%. Dutch government bonds with the same maturity showed a similar picture with an increase of 0.27% to 2.87%.
On balance, bonds with a higher risk profile experienced a slightly positive development last month. Only the risk premium of emerging market government bonds increased slightly by 0.02% to 3.45%. For less risky corporate bonds, we saw a decrease of 0.01% (to 1.12%). For more risky corporate bonds, the decrease was also minimal (0.03% to 3.38%).