Earnings and inflation take the spotlight
Global equity markets saw mixed performance in April.
Earnings and inflation take the spotlight
Global equity markets saw mixed performance in April, amid an uneven start to the first-quarter corporate earnings season and investors’ optimism that inflation in the U.S. may be moderating. Developed markets garnered positive returns and outperformed emerging markets, which ended the month in negative territory. Europe was the top-performing region among developed markets in April due primarily to strength in Switzerland and Austria. The Far East region was the worst performer within the emerging markets in April due mainly to weakness in Taiwan and China. Eastern Europe recorded a double-digit gain and was the strongest-performing region, with notable contributions from Poland and Hungary.1
During the month, investors were focused on the quarterly results for U.S.-based multinational and regional banks to gauge the impact of the turbulence in the sector in March. While several multinational banks reported better-than-expected revenue and earnings, numerous regional banks’ results were hampered by outflows of funds from depositors amid uncertainty about the stability of smaller financial institutions. U.S. automotive stocks also took a hit after a large electric-vehicle (EV) manufacturer reported a substantial year-over-year drop in earnings due mainly to a decline in its operating margin (a measure of profitability) resulting from the company’s notable price reductions. Toward the end of the month, however, markets were buoyed by better-than-expected corporate results from several large U.S.-based technology companies.
Global fixed-income assets posted modest gains in April. In the U.S. market, highyield bonds were the top performers for the period, followed by corporate bonds and U.S. Treasurys.2 Mortgage-backed securities (MBS) were the primary market laggards in the U.S. fixed-income market.3 U.S. Treasury yields moved modestly lower for all maturities of more than one year (yields and prices have an inverse relationship). The yields on 2-, 3-, 5-, and 10-year Treasury notes dipped 0.02%, 0.06%, 0.09%, and 0.04%, respectively, in April. The spread between ten- and two-year notes moved from -0.58% to -0.60% during the period, further inverting the yield curve.
1 All equity market performance statements are based on the MSCI ACWI.
2 According to the ICE BofA U.S. High Yield Constrained, ICE BofA Corporate, and ICE BofA U.S. Treasury Indexes.
3 According to the S&P U.S. Mortgage-Backed Securities Index.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding SEI’s portfolios or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts.
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Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company (SEI).