Market Pulse - April 2021

Key themes

European vaccinations increase, but cases surge in India

The US economy booms

President Biden passes 100 days in office, plans investment in infrastructure and education

Central banks stay dovish

Markets snapshot

In April, the MSCI AC World equity index rose +3.8% (+1.9% in euro terms).

Europe underperformed, rising +2.1% (+2.3% in euro terms), as increased restrictions in certain countries weighed on sentiment.

Japan fell -2.6% (-3.9% in euro terms), as foreign investors became net sellers of Japanese stocks due to concerns that Japan’s stricter curbs to contain the virus would hamper its economic growth.

Emerging markets rose +1.6% (+0.1% in euro terms), as sentiment towards emerging-market investments improved, given downward moves in US Treasury yields.

Pacific Basin equities rose +3.2% (+1.8% in euro terms), benefiting from ongoing accommodative policy from the US central bank and strong commodity prices.

Eurozone >5-year bonds fell -1.6%, with the German 10-year yield rising to -0.20%. The increased pace of the ECB’s Pandemic Emergency Purchase Programme purchases supported European bond markets.

Peripheral spreads widened, with Italian and Spanish 10-year spreads rising to 111 basis points (bps) and 68bps, respectively.

The euro rose against the US dollar to 1.2020, as the Fed quashed speculation about reducing its asset-purchase programme, arguing that employment was still far too short of desired levels.

Commodities rose +8.2%, with West Texas Intermediate (WTI) oil rising +7.5% as a rebound in the world’s largest economies strengthened demand for metals, food and energy.

Gold rose +3.3%, as Covid-19 case numbers in some regions concerned some investors.

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