April was a tough month for global markets as the Federal Reserve completed a
hawkish pivot, bond yields rose, stocks slumped, inflation kept moving higher, and all the
while the Ukraine war raged on.
Having raised rates in March, Federal Reserve officials laid out the framework for an even
more aggressive tightening cycle than they had previously suggested. The market repriced for
multiple rate hikes, including a number of 50bps increases, which lifted bond yields, drove
the dollar higher and helped to send stocks lower. The reason was plain: inflation surged to
8.5%, CPI data for March showed. Meanwhile the month ended on a down note for the world’s
largest economy as figures showed GDP declined by 1.4% in the first quarter. But it was by
then clear the Fed was not about to ease off, despite tightening financial conditions,
market volatility and economic slowdown.
Buoyed by rising bond yields in the US and expectations that the Fed would move faster on
rates than central bank peers, the dollar rose handsomely through April but by the end of
the month was touching multi-year tops, levels above 103 that have previously catalysed a
move lower again. Sterling declined 5% against the dollar as markets took fright at some
increasingly wobbly economic data from the UK and doubted the Bank of England would be able
to act. In the crypto space Bitcoin struggled as we saw deleveraging across risk assets,
declining almost 18% for the month.
For stocks, the bear market rally fizzled out completely. Tech stocks led the selloff, with
the Nasdaq declining over 13% for April, leaving it down 21% for the year. The S&P 500
was down 8.8% for the month. Asian markets were lower too, but European markets held steady.
Disappointing guidance from a number of tech stocks weighed heavily as the Q1 earnings
season landed. Apple and Amazon underwhelmed; Netflix crumbled as it lost subscribers for
the first time in a decade. Finally, Elon Musk set the cat amongst the little blue birds as
he announced a bid for Twitter.
On the Macro-n front, the French elections did not surprise as the incumbent survived a
run-off against Marine Le Pen. Ukraine’s war with Russia raged, pushing commodities higher,
albeit without the kind of volatility seen in February and March. Chinese lockdowns hurt
expected oil demand and raised fresh fears of supply chain problems as container ships
backed up outside of key ports.