Global markets saw heightened volatility in April, as the Fed’s hawkish stance and disappointing earnings results brought markets into a 4-week long decline. In China, continuous support from the central government was insufficient to offset the economic impacts of prolonged lockdowns, with the Chinese Yuan sliding to its biggest monthly drop last month. However back home, sentiment was reversed as markets benefitted from economic reopening, while REITs also continued to gain as the world transitions into the endemic phase of COVID-19. Commodities wise, gold prices gained last month as investors seek shelter in the safe haven asset amid heightened volatility.
In the News
- Market sentiment in April was dominated by the hawkish stance of the Feds and disappointing earning results across the board.
- Despite its rate hike in March, inflationary pressures remain at a 40-year high, fuelling expectations of more rate hikes throughout this year.
- Most major indices in the US saw 4-consecutive weeks of losses last month, as markets battled extreme volatility throughout the month.
- The S&P 500 index dipped 6.17% in MYR terms, while the tech focused Nasdaq Composite Index and highly concentrated FANG+ Index saw double digit losses at 10.76% and 16.55% respectively in MYR terms.
- The 0831EA, which aims to provide -100% exposure to the FANG+ Index saw 20.16% in gains last month.
- Markets in China continued its negative trend in April, as the longer than expected lockdown in the region and its subsequent economic impacts of its zero-COVID policy were strongly felt in April.
- Consequently, the Chinese Yuan saw its biggest monthly drop on record as investors flocked out of China amid lockdown uncertainties.
- New China sectors fared better than the old, as continuous support was seen from the central government to encourage the “healthy development” of the beaten down tech sector.
- The S&P New China Sectors ex A Share Index, which provides exposure into into sectors in the new economy outperformed the broader market to gain 0.32% in MYR terms last month, while the broader CSI300 and the Shanghai Composite Index dipped by 6.12% and 7.53% respectively in MYR terms.
- Locally, markets managed to defy global sentiment, outperforming regional peers to end in the green as the reopening of international borders and the country’s transition into an endemic phase boosted sentiment.
- The Dorsey Wright Technical Leaders Index outperformed regional peers to gain 1.22% last month while the broader KLCI index upped marginally by 0.82%.
- The REITs sector continued to perform last month, as economic reopening continued to gain momentum. The MSCI AC Asia ex Japan IMI / EQ REITs HDY Tilt Cap managed to gain 1.09%, while the 0837EA saw 0.47% gains in April.
- Gold prices saw refreshed buying momentum in April amid heightened volatility, with investors seeking refuge in the save haven asset.
- The LBMA Gold Price Index ended the month 2.42% in the green in MYR terms, while the 0828EA upped 3.03%, bringing its YTD gains up to 10.94%.
On the Economic Data Front
US Economy shrinks with record trade deficit and inventory drawdown, but recession is not expected.
- Advanced estimates show that the economy contracted at an annualised rate of 1.4% in Q1, well below expectation of a 1.0% expansion.
- Recession is unlikely in the near term, as consumer spending and business investments saw better than expected growth.
- The PCE index eased to 5.2% Y-o-Y in March to its first deceleration in a year, indicating an ease in inflation pressures.
China Economy saw expansion in Q1 uncertainties
- The economy grew by 4.8% Y-o-Y in Q12022, up from the 4.0% expansion seen in 4Q2021.
- Manufacturing PMI dropped by 2.1 to end at 47.4 in April, below expectations of 48, while Services PMI dropped by 6.5% to 41.9 as extended lockdowns saw a steep decline in demand.
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