After five straight months of gains, global stock markets retreated in April. The MSCI ACWI index lost -3.4%. The S&P 500 (-4.2%) fell back from its all-time high, while the S&P/TSX (-2.0%) also slipped – albeit less-so given positive performance in the heavyweight energy (+1.1%) and materials (+5.9%) sectors. Elsewhere, the MSCI EAFE fell by 2.8%, while the MSCI gauge of emerging market stocks managed to eke out a positive (+0.5%) monthly gain – with Chinese stocks (+6.5%) rebounding on optimism that the world’s second largest economy is stabilizing.
Fixed income markets also generated negative results last month. Treasury yields pushed higher following hotter-than-expected inflation releases in the United States that added to evidence the Federal Reserve will begin easing later than previously thought. The 10-year treasury yield rose 48 basis points to 4.68%, while the policy-sensitive 2-year yield backed-up by 42 basis points to 5.04%. Despite softer growth and inflation data in Canada, government bond yields followed the gravitational pull of the treasury market. The 10-year government bond yield rose 35 basis points to 3.82%, while the 2-year yield rose by 17 basis points to 4.35%. For the month, the Barclays US Aggregate Bond Index fell -2.5%, while the FTSE Canada Bond Universe shed -2.0%.
The US dollar (DXY) notched a fourth straight monthly gain (+1.7%) as investors scaled back their expectations for rate cuts from the Federal Reserve, while ebbing risk appetite also boosted demand for the safe haven currency. All major currencies declined versus a broadly stronger greenback, with the euro (-1.1%), pound (-1.0%), yen (-4.1%), and Canadian dollar (-1.7%) all depreciating last month.
After surging to the highest level since October following Iran’s unprecedented attack on Israel, oil edged lower towards the end of the month as discussions on a possible cease-fire in the Middle East reduced the risk premium for crude. By contrast, gold posted a third straight monthly gain and breached a new all-time high amid strong demand from central banks and elevated geopolitical tensions that spurred demand for bullion – while copper rallied to a two-year high as a historic squeeze in supplies risked tilting the market into a major deficit amid an expected surge in demand from green industries.
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