Market Summary | April 2019
MARKET OVERVIEW
April’s positive performance continued the market’s momentum locking in a fourth consecutive month of gains. Globally, capital continued to flow into markets as investors became increasingly confident in a resolution of disputes between the US and China.
UNITED STATES
Another strong month for the US from an economic viewpoint, adding 263,000 jobs for the month as unemployment dropped to its lowest levels in 49 years. The average hourly wage was up 3.2% from this point last year. This increase was well above the rate of inflation, resulting in real gains in people’s pockets.
Another strong report is undoubtedly good news for President Donald Trump, who saw his approval rating for his handling of the economy rise to 56% in the most recent CNN poll, the highest mark of his tenure.
The markets also performed well during April with many investors looking forward to keeping on eye on the IPO of UBER. The company is anticipating a valuation between $80 billion to $91 billion whilst also stating publicly that they may never turn a profit. Interesting times ahead.
The S&P 500 Index (USD) rose 3.93%
The Dow Jones (USD) rose 2.56%
ASIA
In an attempt to battle its slowing economy amid the trade war with the United States, Chinese growth gathered pace with banks issuing a record amount of new loans in the first quarter of the year. In March alone, banks issued 1.69 trillion yuan (US$251 billion) in loans, which was the second highest behind only March 2009 when China was at the peak of rolling out an all-out stimulus programme which engineered a rebound in China’s economic growth.
This has resulted in a steady start to 2019 as the nation looks to put 2018’s woes behind them. Economic data flowing out of the People’s Republic has been much stronger of late with many indicators exceeding expectations for the first time in recent memory.
The Hong Kong Hang Seng PR Index (HKD) returned 2.23%
The Nikkei 225 PR Index (JPY) returned -0.84%
The Shanghai Shenzhen CSI 300 PR Index (RMB) returned 1.06%
EUROPE
Brexit was scheduled for 29 March but has since been postponed to 31 October as Prime Minister May attempts to build a bipartisan deal that can meet the approval of the British parliament and EU negotiators. An interesting complication arises with the UK obligated to participate in the elections for the EU parliament on 23 May.
In the broader Europe, economic data suggest modest GDP growth of around 0.2% for the March quarter, but the manufacturing sector continues to contract, with conditions in Germany deteriorating the most. More alarmingly, the yield on German 10-year bonds fell below zero for the first time since 2016, suggesting Europe’s powerhouse may be struggling to keep the economy roaring.
Despite the poor economic data, the German index was one of the strongest globally in April returning 7.10%.
The UK’s FTSE 100 PR Index (GBP) returned 1.91%
The German Dax (EUR) returned 7.10%
AUSTRALIA
The Australian economy enters an election campaign in a relatively vulnerable position, with growth slowing, household debt levels high and considerable uncertainty regarding the outlook for housing and, in turn, consumer spending.
Despite zero growth in the March quarter CPI, the RBA opted to hold the cash rate at 1.50%, possibly preferring to remain on the sidelines during the election campaign.
The S&P/ASX 200 Index rose in April, returning 2.37%. The performance was led by the Consumer Staples sector (+7.4%), with gains from A2 Milk Co (+17.2%), whose third-quarter update revealed further gains in Chinese market share, and Bega Cheese (+10.7%), which won a dispute with Kraft Heinz over packaging design. The Information Technology sector (+7.3%) also extended its gains and remains the fastest growing sector over the past 12 months (+32.9%).
The best performing stock from the index was Eclipx Group who returned +58.59% in April. It rebounded from a sharp sell-off during the first quarter of the year, proving once again that even a dead cat can bounce.
MARKET RETURNS (LAST 12 MONTHS)
Recent performance has pushed Australian equities back into positive territory whilst returns from International Equities (AUD dollar Terms), Fixed Income & Cash remain positive.
April’s performance provided positive returns across equity markets. With both global and Australian equities performing similarly over the last 3 months.
The above graph summarises the performance of the major financial markets and gives you an indication of how these markets performed over the last 12 months. The graph does not reflect your actual portfolio performance.