After a strong start to the year, global equity markets experienced some profit-taking in April. The MSCI World index was down 3.7% for the month, reducing year-to-date gains to +4.5%. In the U.S., the S&P 500 index turned negative by 4% as well as Nasdaq technology index -4.50%. Negative performance also for European stock exchanges with Euro Stoxx closing the month at -2.40%. Same trend for the Swiss stock exchange with SMI at -2.90%. Exceptions were the Chinese market, where the CSI 300 rose 1.9%, and the Hong Kong market where the Hang Seng posted a surprising 5% increase. The Chinese economy has finally shown positive momentum after a long period of relatively weak growth. In the first quarter of 2024, GDP grew more than analysts’ expectations and several indicators point to a continuation of the recovery for the rest of the year, a factor which has helped support the prices of industrial metals.

In the bond market, prices in the representative Bloomberg Global Aggregate index fell 1.8%.  In contrast, there was an increase in the price of gold, which rose 2.5%in April. The reasons for this increase have been the subject of much speculation. Continued purchases by central banks and state institutions in countries that no longer consider U.S. Treasuries to be the safest investment of all are likely to be a major reason for the price rise. This is unlikely to change for the time being, given the rise in global sovereign debt and the non-resolution of various ongoing conflicts.

Inflation continues to prove stubborn in the United States, where it recently rose to 3.5%, which is significantly higher than in January and February (3.1% to 3.2%). Hopes of an interest rate cut by the Federal Reserve have been postponed for the time being.  In Europe, the situation is simpler: weak growth, weak consumption and inflation at levels just above 2% will force a cut that will almost certainly come in June. On the growth front, solid data are confirmed, as recorded by U.S. household consumption; however, the latest labor market data indicate a partial slowdown in job creation that will need to be closely monitored.

On the geo-political source, the risk of escalating  in the Middle East tensions has been prominent over the last few weeks. Despite recent improvements, the situation remains fragile and should be monitored closely as should developments related to the war in Ukraine. The upcoming U.S. presidential election is also attracting increased attention.