Most global equity markets contracted over the month of April. Although the most recent quarterly company earnings in the United States have largely outperformed analyst expectations, persistent inflation and central bank rhetoric saw markets delay expected interest rate cuts until later in 2024. The value of the Australian Dollar (AUD) against major foreign currencies was mixed, which meant the effect of movements in the AUD had minimal impact on overseas investment returns. Australian and international fixed interest markets posted negative returns as yields broadly rose.

Global inflation has been steady or moderating towards central banks’ targets in many advanced economies. Reported data for March, released in April, showed that year-on-year Consumer Price Inflation (CPI) rose 3.6% in Australia over the 12 months to the March 2024 quarter, slowing from the 4.1% annual pace in the December quarter. In the Euro Area, the Index of Consumer Prices rose 2.4% year-on-year in March, down 0.1% from the previous month. The United Kingdom’s CPI, including Owner Occupier’s Housing Costs, rose 3.8% in the 12 months to March 2024, which was unchanged from February. Notably however, recent data released by the US Bureau of Labor Statistics shows that US inflation remains sticky. The US CPI climbed to 3.5% year on year in March, an increase on February’s CPI of 3.2%. This is the highest US CPI annual reading in the past six months with shelter and gasoline contributing to more than half of the increase. 

The Chair of the US Federal Reserve, Jerome Powell, stated in a central banking forum on 16 April 2024: “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence. If higher inflation does persist, we can maintain the current level of restriction for as long as needed. At the same time, we have significant space to ease should the labour market unexpectedly weaken.”

The International Monetary Fund (IMF) published its World Economic Outlook on 16 April titled “Steady but Slow: Resilience amid Divergence”. The report notes “the forecast for global growth five years from now—at 3.1 percent—is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies.”

The end of April signaled just over six months to go before the US Presidential election, with incumbent Democrat Joe Biden and Republican former President Donald Trump all but being assured of being the major parties’ respective nominees. Poll results so far suggest this rematch election will be a very close race. On 15 April, former President Trump became the first former US President to face a criminal trial, known as the “hush money trial”, where he allegedly violated federal campaign finance laws by paying an adult film actress to remain silent about an encounter in the run up to the 2016 election. 

Equities

Major developed foreign equity markets fell in April with developed markets (excluding Australia) returning -3.3% on a local currency basis (though remaining unchanged in Australian dollar terms). The worst performing major foreign equity markets were the S&P 500 and the Nikkei 225 returning -4.1% and -4.4% (in local currency terms) respectively in April whilst the best performing major foreign equity market was the Hang Seng which returned 7.4%. 

The Australian stock market (S&P/ASX 200 Index) returned -2.9% for the month, with nine industry sectors experiencing negative returns and two industry sectors experiencing positive returns. Utilities was the standout performing sector, returning 4.8%. The largest detractor was Real Estate, which returned -7.7%.

In overseas developed share markets, similarly nine sectors produced negative returns for the month, with only two sectors producing positive returns. The worst performers were Consumer Discretionary and Information Technology, returning -4.2% and -5.5% respectively. The highest performing sector was Utilities, which returned 1.3%.

Bonds

Currencies

Commodities