April’s global financial market moves provided many investors with a much-needed respite following a challenging start to 2018. US Gross Domestic Product (GDP) figures showed positive growth in trade as well as evidence that US-based businesses are increasing their spending on investment, a sign that confidence is increasing, something many attribute to Trump’s pro-business tax cuts.
Meanwhile, UK first-quarter GDP figures caused some concern, growing at their slowest rate since 2012. The three main factors for this appear to be concerns about a wider global slowdown, continued uncertainty surrounding Brexit and the disruptions caused by the Beast from the East in February, all affecting growth and productivity. Despite these challenges, economists forecast stronger growth through the remainder of the year.
Stock markets were generally positive by the end of April, with our local UK markets among the best performers. The UK’s impressive performance can be attributed to three main drivers:
The effects of the falling Pound – the weakening of the Pound in April in response to poor GDP data and lower-than-expected CPI inflation, had the effect of strengthening UK stock markets. Our home markets are largely comprised of companies whose earnings are made in foreign currencies, so a dropping Pound naturally boosts their profits.
Higher commodity prices – energy and material companies, like Rio Tinto and Royal Dutch Shell, both members of the FTSE100, had their profits boosted by a continuing rally on energy prices.
Corporate results – a succession of Q1 2018 results from the likes of Tesco and HSBC are showing strong corporate performance, providing confidence in the markets.
In currency markets the Pound had a mixed result against most major currencies, weakening against the US Dollar, -1.80% and Canadian Dollar -2.23%, but strengthening +2.00% against the Swiss Franc and 1.03% against the Japanese Yen, both of which you’d expect to decline against when confidence is returning to markets.
Investment type performance breakdown
Most investment types ended the month higher with only bonds producing negative results. Commodities +4.68%, private equity +3.84%, bond investments -0.34%, property +4.99% and shares +4.28%.
Summary with Plan details
All of our investment plans made gains for the month of April. It is difficult to predict how investment markets will perform as we approach the summer months. With parliament in recess and people on summer holidays, it tends to be a time when the markets are quieter, but our investment team will be keeping an eager eye on your plans and ready to act should any opportunities or situations arise.
*Figures shown are based on a medium-risk (Confident) investment Plan.
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.