April passed in review as a positive month for the financial markets. The growth in equity markets was driven by the favourable economic outlook. Better management of the pandemic, with a global trend towards reopening business, will lead to growth in the global economy as a whole. The quarterly results published so far are proof of this, with companies benefiting from a significant increase in turnover and profits. With a strengthening macroeconomic scenario and rising corporate profits, it is likely that the optimistic trend will continue in the coming months. However, as always, when sentiment is generally positive and there is an increase in stocks valuations, the risk of incurring corrections, triggered mainly by profit-taking by investors, should not be underestimated. Traditionally, May is a weak month for stock markets. After the performance recorded in recent months there might be reason to believe that the saying “sell in may and go away” could be confirmed. Caution is a must!
The 10-year US treasury settled between 1.60%-1.55%, favoring a positive trend in the US stock market with the S&P500 index gaining 4% and the Nasdaq 3.50%. Europe was also positive with the EuroStoxx50 index up 0.73%. The peripheral countries had alternating phases with the German DAX index up 0.20% and the Italian FTSE MIB index down 2.30%. Negative the Swiss index, which after reaching a peak of 11,262 has retraced to close at 11,022, down 0.85% on the month. Asian markets fell: the Chinese CSI300 market held +0.25%, while Hong Kong fell -0.74%, the Nikkei -2% and the Indian Bombay index -2.50%. The main factors that weighed on the markets were the dramatic increase in COVID 19 infections in India and the criticality of the medical-health structures. Despite these concerns our view of the Indian market remains optimistic as it is essentially geared towards global trends, with greater exposure in US-oriented IT companies and long-term structural growth.
President Joe Biden, during the celebration of the first 100 days of his presidency, unveiled his “American Families Plan,” the third $1,800 billion aid plan that includes targeted measures for families. This aid package is expected to be partly financed by tax increases on the wealthy and Amerincan companies. The FED did not touch the reference rates and kept the pace of bond purchases unchanged, giving no sign of change to its strategy. In Europe, nothing special to report with the ECB that decided to reconfirm the very accommodating orientation of its monetary policy, confirming interest rates.
Another event to report this month was the IPO of one of the largest cryptocurrency exchange platforms in the world: Coinbase. Nasdaq’s reference price was USD 250, bringing the company’s overall valuation to around USD 65 billion. On the day of its debut on the stock exchange, the price rose up to USD 381 (+52%) per share, only to retrace settling around USD 300 per share. This is one of the highest quotationfor a U.S. company and according to many experts will spread more transparency on the cryptocurrency industry.