Market Update

Monthly Market Roundup cov. April 2024

Monthly Market Roundup
Key takeaways

European equity markets declined for the first time this year amid robust inflation and muted Gross Domestic Product (GDP) growth, raising stagflation concerns.


UK equity market rose, yet inflation and government borrowing concerns may affect economic policies and tax cuts.


Asia Pacific equities declined, with Japan and South Korea down, while Chinese and Hong Kong markets rebounded.

Summary of markets in April

Global equity markets had a mixed month in April, with European and US equities declining while the UK stock market reached a new high. UK inflation fell to 3.2% in March, below the US inflation rate for the first time since March 2022. Swaps markets traders anticipate Bank of England (BoE) interest rate cuts in September or November. Asian markets faced geopolitical risks and US inflation concerns, with Japan and Korea performing poorly but notably China and India, performing well. Government bond markets encountered challenges due to persistent US inflation.

European equity markets saw their first monthly decline this year as robust inflation and muted. GPD growth revived stagflation fears. Energy sector gains, driven by Middle East tensions, buoyed oil prices.

The Euro area emerged from recession in the first quarter after five quarters of stagnation. Real GDP grew by 0.3%, exceeding expectations in major economies. Spain and Portugal led with 0.7% growth, while Italy saw firm growth at 0.3%, and France and Germany at 0.2%.

Headline inflation was unchanged at 2.4% in April, in line with March and expectations. Both core and services inflation fell boosting European Central Bank (ECB) confidence in a return to the target rate. Policymakers may consider starting interest rate cuts starting in June, based on the outlook.

UK equity market rose in April with the FTSE 100 index hitting a new all-time high. A weaker pound, eased Middle East tensions, and rate cut hopes all contributed.

The UK economy grew 0.1% in February, following revised 0.3% rise in January. Data from the Office for National Statistics (ONS) showed widespread sectoral growth. The International Monetary Fund (IMF) has downgraded overall UK growth for 2024 to 0.5% from 0.6%.

Inflation fell to 3.2% in March, dipping below US price growth rates for the first time since March 2022. The Bank of England (BoE) is now expected to start cutting interest rates in the second half of the year with, swaps markets traders now pricing cuts in for September or November.

In April, US equity markets fell, with the S&P500 posting losses after five consecutive months of gains. Most sectors saw negative returns, with real estate, information technology, and healthcare trailing, while utility stocks rose.

US Federal Reserve (Fed) Chair Jerome Powell suggested inflation might take 'longer than expected' to reach the 2% target, delaying potential interest rate cuts. This dampened previously optimistic investor sentiment about the possibility of interest rate reductions.

Unemployment fell from 3.9% to 3.8%, showing resilience in the labour market. Preliminary first quarter gross domestic product (GDP) came in at 1.6%. This was below the 2.5% that analysts’ had been expecting.

Asia Pacific equities fell back in April, with Japan and South Korea declining the most. Market sectors like information technology and consumer discretionary faced losses, though Chinese and Hong Kong markets rebounded.

Korean equity markets declined, led by information technology, amid diminishing expectations of multiple US rate cuts. The Bank of Korea maintained its base rate at 3.5%, citing the necessity for inflation progress before rate adjustments.

Taiwanese equities, particularly in information technology, declined. The Central Bank unexpectedly raised its key discount rate to 2% due to persistent inflationary pressures.

Emerging markets had a positive month, progressing despite heightened geopolitical risks and continued US inflation pressures.

There were gains across Asian markets, Europe, Middle East and Africa (EMEA remained flat) and Latin America fell back. China and India were the leading markets in the emerging markets region.

Eastern European equity markets edged up, while Gulf markets dipped slightly as oil prices fell. In Asia, Indian equities surged, notably in the financial sector. 

The growing sense that the US Federal Reserve will cut interest rates less than previously aniticipated weighed on bond markets in April.

Corporate bond markets saw investment grade (IG) bonds, sensitive to interest rate changes, underperform high yield. Dollar and sterling IG weakened most, down 2.33% and 2.04%, while euro IG returned -0.84%.

In high yield corporate market, dollar bonds returned -1.00%, while European currency bonds remained flat at -0.03%. 

Read the full roundup below

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    Monthly Market Roundup cov. April

    By Invesco

    In our monthly market roundup for April, Invesco experts give a rundown on a mixed month for global equity markets, plus an overview of bond markets.

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  • All information is provided as 31 March 2024, sourced from Invesco unless otherwise stated.

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