Market Updates

US Market Update April 2023

By Tahir Mahmood | 17 May, 2023

So far in 2023, market attention and performance have revolved around key data releases. Following a subdued market sentiment in 2022, the introduction of optimistic data in the form of lower inflation figures has been driving market gains this year, and April was no exception to the pattern.

Despite the backdrop of ongoing stress in the banking sector, risk assets performed well during April. The US, eurozone and UK all posted better-than-expected performance in their Purchasing Managers Index (PMI) surveys posting figures north of 50. PMI figures above 50 are an encouraging indicator of economic expansion. As a bonus, Q1 GDP (Gross Domestic Product) figures from China surpassed expectations too.

Inflation, the unwelcome guest that continues to impose and drive market movements, brought some respite in April. Falling energy prices have helped to decrease headline inflation in major economies. This downward trend is expected to continue as OPEC (Organization of the Petroleum Exporting Countries) announced a production cut aimed at stabilising oil prices around $80 per barrel. When compared to the high levels seen in 2022, this level will drag on headline inflation going forward, providing further relief.

For bond investors, markets were much calmer than the previous month with small movements in developed government yields; UK gilts lagged due to upside surprise inflation numbers. Globally, credit markets generated positive returns as spreads tightened in the recovery following recent events of Silicon Valley Bank and Credit Suisse and a slew of supportive earnings data. The Bloomberg Barclays Global Agg index returned ↑0.44%. Developed equities all gained in April: S&P 500 ↑1.56%, MSCI UK ↑3.60%, MSCI World ↑1.80%. Gold edged up in April, benefitting from its safe-haven status, following the continued market uncertainties.

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