There were fewer economic surprises in April, and yet markets proved underwhelming. Financial data and risk appetite was flat, with investors sitting on the sidelines, but there also appears to be a lack of concern, with the VIX sitting at a multi-year low, having dropped 16% month-on-month to close at 15.8.
This sentiment was fueled by slowing US growth and disappointing results. In Europe, the eurozone returned to growth, expanding 0.1% in the first quarter, although this was short of Bloomberg's 0.2% estimate.
Skirting a recession is the done thing nowadays, and it is not very clear which country will be the first to go down this rabbit hole - most countries are close. Germany is a leading candidate, with a stagnating economy, as is the UK, which has lurched from one crisis to another. Could we have seen the bottom? The likelihood is not. While most countries are eeking out marginal growth, China rolled out majestic GDP figures of 4.5% in the first quarter…
Inflation is proving stubbornly unmoving. Of the G7 nations, the UK remains the unwanted leader on this particular metric. The past year's high energy costs are still firmly stuck in supply chains and is reflected in higher prices. In the US, inflation is more manageable than the UK's, albeit still high at 5% and eurozone consumer inflation is down to 6.9% from 8.5%.
Does this mean an end to interest rate rises? The likelihood is not, but we are closer to the end than the beginning. Central banks still feel there is further work - inflation is however slowing and there are glimmers of dovishness among central bankers.
Equities were largely positive this month, and while there were some disappointing quarterly earnings, markets rode them reasonably well. The S&P 500 rose 1.5% to close the month at 4,169, while the Nasdaq was flat at 12,226. In Europe, the FTSE 100 was up 3.1% and the Dax up 1.9%. In Asia, the Nikkei 225 was up 2.9% at 28,885.
It was a typical rollercoaster ride for crypto in April. Taking Bitcoin as the proxy, it started at $28k and closed at $29350, up 3.3%. In between, it touched $30.3k, then stumbled on European and US regulatory concerns.
China's economy may still be growing at a healthy clip, but this does not mean it has filtered through to global commodity markets, with China still appearing disinterested (even with the 4.5% GDP). Oil was marginally up, while gold went back through $2,000 and closed the month just shy at $1999.1, while silver rallied mid-month, only to fall back towards the end to close up 4.4%.
The USD continued to fall as market participants factor in fewer rate rises than predicted, and US investors looked further afield - there is less pessimism in Europe and even the UK. Reflecting this thinking, Refinitiv data shows speculators have doubled their shorts on the greenback.