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5. May 2017 21:35
by Irene

April 2017 - Market Commentary

5. May 2017 21:35 by Irene | 0 Comments

The biggest news in April was the topic of elections – the first round of elections in France, with Macron being favoured as the winner, and Theresa May’s call for a snap election in the UK in June. "Another one? Not again!", as one lady famously commented about the news. Sterling rallied on the news of that and in total gained 3.1% for the month. That did not bode well for international assets, the prices of which are mostly down over the month in GBP, as can be seen from our main asset class returns table.

United Kingdom

Apart from the fallout with some of the members of the EU, Brexit has taken a slight back seat as negotiations will only start in earnest after the UK elections. The FTSE 100 reacted negatively to the announcement, but regained part of its losses again, though net-net it finished down -1.3% for the month. As in most months, the macro economic outlook was mixed, with the Office for National Statistics (ONS) reporting a sharp slowdown in UK growth from 0.3% for Q1 2017 versus 0.7% in Q4 2016. Retail sales also slumped, whereas in contrast the flash purchasing manufacturing index (PMI) has been up.


European equities gained in April with the Euro Stoxx 50 up 2.4% in EUR (0.9% in GBP) and was one of the few equity markets up for the month of April when converted to GBP. Markets reacted positively to the victory of Emmanuel Macron in the first round of the French presidential elections. Another positive catalyst was improving economic data with the flash April purchasing managers index showing further expansion to 56.8 and the German Ifo business climate index rising to 112.9 from 112.4, the highest level since July 2011. <

United States

Equity markets in the United States were in the main moving sideways amid disappointing macro-economic data for Q1 GDP growth and the purchasing managers index. In USD terms, the S&P gained 1.0% (-2.2% in GBP) and surprisingly, and if not somewhat odd, the VIX Index, a gauge of fear in the markets, ended the month at a very low level at 10.6%.

Emerging Markets

The MSCI Emerging Markets Index returned 2.2% in USD (-1.1% in GBP) helped by the weaker Dollar and an increased risk appetite. Emerging Markets’ dependence on commodities has declined and is driven in part by domestic growth. European Emerging Markets (ex Russia) performed the best, helped by the decreased political risk of the first round of elections in France.

Fixed Income

The one asset class that did well in April was inflation-linked bonds. UK inflation-linked bonds returned 2.5%, driven higher by the increase in inflation. This was true for most regions, with TIPS and European inflation-linked bonds up as well in their local currencies. Corporate bonds, both in investment-grade and high yield, returned positive results as well for the US, Europe and the UK.


As an asset class, most of the commodities retreated in April, with WTI Crude Oil down -3% for the month in USD. Gold on the other hand did not lose its shine and gained 2% in USD, not perturbed by potential rising rates in the US.

Market Returns Overview

Source: Markit, Twenty20 Investments, as of 30 Apr 2017, all returns in GBP.

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