Following what was one of the most volatile Q1’s on record, Q2 kick started the second quarter on a positive note in April. According to DB (whose stock has failed to meaningfully rebound from recent lows) while performance didn’t quite match those lofty gains made in March, in the face of a number of key central bank meetings and also the commencement of earnings season in the US and Europe – for which expectations were low – risk assets in particular have shown a reasonable degree of resilience on the whole.
According to DB's Jim Reid, traders would be hard pressed to find many assets which had a negative total return month. Looking across the asset sample, its sovereign bond markets which were the standout underperformers with Treasuries, Bunds, Gilts, BTP’s and Spanish Bonds sitting in the 0% to -1% range. At the other end of the scale there is a clear theme and that’s the performance for commodity markets.
Indeed despite the Kuwait Oil producers meeting ending in a blank, it was another strong month for both WTI (+20%) and Brent (+16%) which resulted in both marching to the highest level this year. Silver (+16%) and Corn (+11%) were the other big performers in the commodity complex this month. In fact, the commodity market index rounds off the top 5 with an +8% return during the month. Brazilian equities (+8%) get another honourable mention this month with markets reacting positively to the latest political developments there, while it won’t be much of a surprise to see the Yen (+6%) also creep into the top ten following the BoJ disappointment at the end of the month.
In terms of equity markets, European banks (+6%) were the standout performer despite a weak last day of the month, although the sector is still well down on a YTD basis. European equities (+2%) had a reasonably solid performance on the whole, with Spanish (+4%) and Italian (+3%) markets leading the charge. Across the pond the S&P 500 (+0.4%) just stayed in positive territory, although the post-BoJ reaction saw the Nikkei (-1%) underperform. Credit market performance was decent especially given the moves in rates markets. Higher beta credit indices were the outperformers with EUR and US HY in particular finishing +2% and +3% respectively – the latter clearly benefiting from the move in Oil. EUR IG indices were also in positive territory with the announcement of the details around corporate bond purchases giving the asset class a positive boost.
If we look at returns on a USD basis only, the standout mover is the Nikkei which, when stripping out the rally in the Yen, jumps into the top ten with a +5% return.
Finally, on a YTD basis for USD-denominated assets, here are the best and worst performers.