Investment

April General Markets Comments

by Pierre Mouton

April General Markets Comments

“Superstition” – Stevie Wonder, 1971

Everybody knows the old market quip “Sell in May and go away”, which sounds like a superstitious motto, but, depending on which side of the pond you’re based, the timing for coming back differs significantly. In the US, that’s Labor Day (beginning of September), and on the other side of the Ocean, that’s Derby Day (Epsom horses races in the UK, beginning of June). This adage is simply based on historical observations: there is statistical evidence that equity markets returns are, on average, much better between November and April than between May and October. But the rationale behind this performance gap remains nebulous: the most common belief is that volumes tend to dry up as the sun becomes more present, investors swapping their prescription glasses for sunglasses and being more focus on sunscreen than desktop screens. That doesn’t sound very serious, but there is no other real explanation. “You believe in things you don’t understand”, as Stevie sings.

Well, in 2024, the selling season has started earlier, as April was pretty poor; is this an effect of Climate Change? Probably not: there is more and more evidence that inflation targets will prove challenging to reach, especially in the US, which questions the previously expected rate cuts by the Fed this year, some participants even suggesting a possible hike, something that was clearly not in the cards. As a result, long term yields shot up (+48 bps for the US 10 year, +28 bps for the 10 year Bund), the dollar rose with +1.66% for the broad DXY index, and most equity markets fell: the MSCI World abandoned 3.9%, the S&P 4.2%, the Nasdaq 4.5% and the Stoxx 600 1.5%. Some surprises to mention though: despite a strong dollar and rising yields, Gold shone and added 2.5%, Emerging Markets equities resisted and ended the month up 0.3%, and the Chinese CSI 300 index surged 1.9%.

Value and Growth were both weak (-3.6% for the MSCI World Value and -4.1% for the MSCI World Growth), but the Japanese Yen takes the cake for weakness with a 4% fall versus the dollar (-11.6% ytd), mitigating the apparent strong Topix performance: in USD terms, the Japanese equity index lags the S&P 500 by almost 150 bps year to date.

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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October General Market Comments

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