While April started well, buoyed by a smorgasbord of central bank easing around the world (and promises, promises from the rest), it ended on a decidedly ugly note both in the US and abroad. However, Chinese and Russian stocks topped the list YTD while Greece, Corn, and Wheat languish at the bottom...
However, as Deutsche Bank's Jim Reid explains, April proved to be a better month for assets than it felt as we closed the book on it.
It was an especially good month for EM equities and Oil. In particular the Chinese equity markets posted its biggest monthly gain (+18.5%) this year, taking the Shanghai Composite's YTD gains to around 37%. Expectations of further easing/stimulus, hopes of SOE reforms and the rise in margin lending may have all played a part in fuelling the market higher but the China rally also had a spillover effect into HK. The Hang Seng posted its best monthly performance since May 2009 to take its YTD gains to around 20% while the HSCEI index gained 17% in April to mark its best month since October 2011. April was generally positive for EM assets which saw the broad based MSCI EM equities benchmark gain by nearly 8%. Interestingly Greek equities added a healthy 6.5% in April despite the still fluid debt situation in Greece. This one was of the few European assets to end the month on a strong note. On a full year basis, the Shanghai Comp (+37%), Portuguese equities (+28%) and the FTSE MIB (+21%) are some of the best performers. Equity market moves aside, the rally in WTI (+25%) in April also marks as one of its strongest monthly performance since May 2009.
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On the opposite of the measuring scale, Wheat (-8.7%) and Corn (-3.3%) were the main laggards while the Dollar (-3.8%) suffered from its first monthly decline since July 2014. The DAX posted its first monthly decline (-4.3%) for the year as the Euro rose 4.6% against the Dollar. The underperformance in German equities aside, the weakness in fixed income was also generally quite notable with Treasuries (-0.6%) and Bunds (-1.4%) declining amongst others. The move impacted Credit total returns but it was notable that European and US HY fared better than their IG counterparts in April. Indeed in Europe, HY performed well in the face of rising yields with a solid monthly total return of 0.5% (single-B non-fins +0.7%), which compared favourably to the returns on shorter dated (1-5yr) German Government bonds (-0.2%).
Looking at performance YTD in $ terms the Shanghai composite remains the top performing asset (up 37.4%) although the Micex isn’t fair behind (up 37.1% in $ terms). Given the EUR weakness YTD European equities lose some of their shine on the USD comparison, slipping down the performance table somewhat although the Portuguese General and FTSE-MIB performance remains in the top 6 of performers. At the other end of the scale the USD strength we’ve seen so far this year dominated the more modest gains we’ve seen in EUR fixed income credit in particular, which along with the Greek equity market, EURUSD and wheat and corn fills out the bottom of the YTD $ performance table.
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As reid concludes, "Bring on the month of May."