Market Summary | April 2022

MARKET OVERVIEW

Global markets descended further over the month of April as 'zero-COVID' lockdowns in China added to prolonged geopolitical risk pressures in Ukraine.

Quantitative tightening signalling from central banks has joined geopolitical uncertainty as core focuses for investors as heightened inflation continues to weigh on investor sentiment.

The Russian war on Ukraine continues to put pressure on energy prices and caused the IMF to downgrade global annual growth projections to 3.6%. Rising inflation remains a concern, with the IMF calling it a ‘clear and persistent danger’ for the global economy.

April saw the continuation of ‘zero-COVID’ lockdowns in China

United States

Inflation in the USA jumped 1.2% in March, in line with forecasts, pushing the annual rate to 8.5%, the highest since December 1981 and putting pressure on the Federal Reserve to continue to increase interest rates.

Dividend yield and value factors were the best performers over the month returning -1.8% and 2.6% respectively, whilst momentum and quality factors lagged returning -9.7% and -7.9% respectively according to MSCI ACWI Single Factor Indices reported in local currency terms.

The S&P 500 Index (USD) returned -8.80%
The Dow Jones (USD) returned -4.91%

Asia

Continuing COVID outbreaks in China have caused ongoing restrictions and threaten to again impact global supply chains.

China’s GDP grew 1.3% in the March quarter, with the yearly growth rate coming in at 4.8%, ahead of the 4.4% expected and the 4.0% recorded in December. Inflation was flat in March, slightly beating the anticipated 0.1% fall, with the annual rate increasing to 1.5%.

Japanese consumer confidence edged up in April to 33, the first improvement in six months after the government ended the quasi-state of emergency in late March following a decline in new COVID-19 infections and increasing vaccinations.

The Hong Kong Hang Seng PR Index (HKD) returned -4.13%
The Nikkei 225 PR Index (JPY) returned -3.50%
The Shanghai Shenzhen 300 PR Index (RMB) returned -4.89%

Europe

The European Central Bank held interest rates at 0.0% during the April meeting, consistent with the prior March quarter, with President Lagarde noting the timeline for potential interest rate increases has not been determined.

The annual inflation rate rose to a fresh record high of 7.5% in April and is now over three times the 2% ECB target. Energy price increases have slowed but remain extremely high.

The UK’s FTSE 100 PR Index (GBP) returned 0.38%
The German Dax (EUR) returned -2.20%

Australia

The RBA left the cash rate unchanged at 0.1%, with pressure mounting for an increase in May on the back of rising inflation. Inflation increased 2.1% in March, pushing the annual rate to 5.1%.

The Australian market closed for the month of April with the S&P/ASX 200 down -0.85% with seven out of eleven sectors finishing higher. Utilities led the index (+9.33%) to continue its strong performance, with Industrials (+3.47%) and Consumer Staples (+3.29%) all performing well. The main detractors of the Index were Technology (-10.37%) and Materials (-4.33%).

High exposure to Resources shares and low exposure to Technology companies has meant the Australian Share Market remains an outperformer relative to global peers. The Technology sector suffered a sizeable selloff after strong March performance, continuing the trend of high volatility in the sector.

Macroeconomic uncertainty clouded much of the month’s headlines with the inflation figures hitting 20-year highs. Australian investors took precautions flocking to defensive sectors over the month leading to the positive performance in Utilities and Consumer Staples. Market volatility is expected to remain high in the short-to-medium term with China’s COVID lockdowns hampering growth with increasing supply chain issues.

Market Returns (last 12 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.

*Source: Lonsec Research Pty Ltd