Market Review: April 2019

Global markets did well on the back of a good earnings season. The S&P 500 had reached over 15% in returns by the end of April, for the year to date. Trump suggested that the sanctions against Iran’s oil production would be reinforced following May, giving oil strong gains (over 6%). The US also slapped Venezuela with oil sanctions this month, causing crude oil and Brent prices to rise as well. The IMF downgraded the world’s economic growth forecast near mid-month, resulting in a more cautious investor atmosphere, and the Federal Reserve similarly opted to keep rates the same. JPMorgan opened a surprisingly positive earnings season with strong results, but poor results from Goldman Sachs led to a 4% drop in their share price. As the month drew to a close, the NASDAQ rose to its highest point in half a year and the S&P 500 hit a new record high.

After a strong first quarter (up almost 25%), the Shanghai composite had a somewhat wilder ride in April than in March, hitting highs last seen a year ago but ending with an uninspiring 0.5% return for April. Chinese annual inflation figures came out as expected at 2.3%. As GDP results were released for the first quarter of 2019, Chinese markets rode the wave upwards to over 6%. Japanese markets stalled momentarily as the central bank indicated a dovish tone, but continued fairly positively.

The European Central Bank press conference lifted investors’ sentiment even as the possibility of a trade spat with the US started. No interest rate hikes were signalled for the remainder of 2019. The Eurozone dipped into the red after Easter, and investors watched their chocolate supplies dwindle. Britain requested a Brexit extension from the EU once again, which had little of the desired effect on the Pound. The Pound only dropped significantly after poor inflation figures were announced for the UK. The Royal Bank of Scotland’s share price lost over 4% after announcing a decrease in revenue for the first quarter and causing a further dip in the FTSE 100 as investors took the fall as a Brexit warning of what is still to come.

Developing markets underperformed developed markets by over 30%. Both Brazilian and Indian markets fell back somewhat but the Turkish Lira was noticeably the worst performing currency. Over the last eight years, South Africa has been in its lowest period of growth since the 1940s. The markets waited with bated breath to witness the outcome of the 2019 elections. Nonetheless, the equity market managed 4.2% in April with Financials as the leading sector. Aspen shares rose strongly by over 10% and MTN gained over 15%! But resources companies struggled and AngloGold shares lost over 10% during the month. Providing the Rand remains flat against the Dollar, South African investors should be able to make the most of the positive global returns. It should be noted that while the JSE has been weaker over the past five years, it is in line with most non-US markets, and South Africans should not be despondent over our slow but continuous economic progress.

During April 2019 the FTSE/JSE All Share Index (ALSI) gained 4.23% on a total return basis, while bonds gained 0.75%. The SA Listed Property Index (SAPY) gained 3.17% in April, and cash returned 0.59%. Internationally, the MSCI World Index gained 3.55% in Dollar terms and the MSCI Emerging Markets Index ($) gained 2.12%. This April the Rand gained 0.59% against the greenback and 0.79% against the Euro.

For the year to date, the ALSI and ALBI returned 12.54% and 4.59% respectively. Listed property returned 4.67% and cash returned 2.37%. Internationally, the MSCI World Index returned 16.47% in Dollars, and the MSCI Emerging Market Index returned 12.23, in Dollar terms.