April 2020 has been an interesting month in the markets, as global lockdown measures saw weakening economic data coming from the UK, America, and Europe as the pandemic continues.
In the UK, the data released in April suggested that the already struggling manufacturing industry is likely to get worse. This comes from the Purchasing Manufacturing Index (PMI), which is a survey that collects information from businesses each month and packages the data into an easy to understand number to provide an insight into the manufacturing and service sectors. Anything above 50 is good news for industry and the wider economy, but this month we saw the UK’s PMI score fall from 47.8 in March to 32.9 in April.
But it’s not just the UK that’s been affected, the US has reported negative growth of -4.8% for the first 3 months of 2020, as consumers and businesses aggressively cut their spending. This negative growth has made this the weakest quarter since the end of 2008, when the US economy shrunk by –8.4%. April also saw the US labour market suffer greatly, as jobless claims soared to an all-time high as the economic impact of industry shutdown took hold.
Looking over to the Eurozone, PMI data reported in April suggested a decline in business activity across all countries in both manufacturing and services. The most alarming number was Eurozone economic data which declined from 52.6 in February to 26.4 in April.
In April, global stock markets ended the month higher with some markets finishing up in double figures!
The FTSE 100, representing the UK’s largest public companies, ended up 4.28% in April. The move was driven by a variety of companies from different sectors, with certain companies, such as Just Eat (up 33.69%) and Ocado Group (up 29.81%) doing particularly well in the current circumstances. Investors are perhaps (unsurprisingly) anticipating food delivery companies are likely to flourish in the months ahead.
In the US, the S&P 500 stock market was one of the strongest performers, closing up 12.82%. Besides the Federal Reserve essentially saying they’re going to do whatever it takes to support financial markets, the move higher was driven by technology stocks. Amazon continued its amazing performance year-to-date, closing up 26.89% in April, with Microsoft and Apple coming in positions two and three, respectively.
Other markets also enjoyed mid to high single-digit returns; Asia ex-Japan was up 8.97%, Emerging Markets 9.18%; Europe 6.61%; and Japan 6.75%.
The pound continued its rally from mid-March through to April, ending the month higher against most major currencies. In April, we saw the pound strengthen against the euro (+2.06%), Japanese yen (+1.05%), and the US dollar (+1.38%). This is likely due to a reversal in sentiment towards the economic impact of the coronavirus.
Investment type performance breakdown
In a month where economic data and stock market returns felt like they couldn’t be further apart, all of our investment types delivered positive returns; bonds closed up 1.04%, property 6.69%, and shares 9.72%.
Summary with Plan details
Similar to investment types and markets, the performance of Wealthify Plans in April was positive. Plans that hold more shares delivered slightly more returns than Plans that hold more bonds, reflecting global stock market performance.
Our Investment Team continue to actively monitor the financial markets and their impact on your Plan, and as always, we are ready to act in your best interests to events as they unfold.
The figures shown are based on a medium-risk (Confident) investment Plan.
Please remember the value of your investments can go down as well as up, and you could get back less than invested. Past performance is not a reliable indicator of future returns.