April 2015

• Global markets posted broadly positive returns in April 2015 as continued monetary accommodation in Europe and Japan, improving corporate earnings and stabilising commodity prices supported investor sentiment.
• European equities remained strong, while government bond markets experienced significant volatility as yields rose sharply from historic lows.
• The United States delivered modest gains despite mixed economic data and ongoing uncertainty over the timing of the Federal Reserve's first interest rate increase.
• China's equity market surged as investors anticipated further policy easing to support economic growth.
• Emerging markets benefited from a softer U.S. dollar and improved appetite for risk assets.
• Commodity prices, particularly crude oil, rebounded from earlier lows as supply and demand expectations began to stabilise.

Asia (ex. Japan)

Asian markets outside Japan generated strong returns in April, led by another substantial advance in Chinese equities. Expectations for additional monetary easing and fiscal support intensified after economic data confirmed that growth was moderating. The People's Bank of China cut reserve requirement ratios for banks, reinforcing confidence that policymakers would continue to support the economy and financial markets.

India also performed well as inflation remained subdued and optimism persisted regarding structural reforms. Across the wider region, lower oil prices and accommodative monetary conditions continued to support domestic demand. Export-oriented economies such as South Korea and Taiwan remained sensitive to fluctuations in global trade, but sentiment improved as the U.S. dollar softened.

Europe

European equities continued to advance in April, supported by the European Central Bank's quantitative easing programme and improving business confidence. The weaker euro enhanced the competitiveness of exporters, while low borrowing costs and improving credit conditions encouraged a more constructive outlook for regional growth.

Bond markets, however, experienced notable volatility as German Bund yields rose sharply from exceptionally low levels. Investors reassessed inflation expectations and the sustainability of extreme bond valuations. Despite this turbulence, equity markets remained resilient and continued to benefit from abundant liquidity and favourable monetary policy.

United States

U.S. equities delivered modest gains during April despite softer-than-expected economic data. First-quarter GDP growth slowed, reflecting severe winter weather, port disruptions and reduced energy investment. Nonetheless, employment conditions remained strong and consumer fundamentals continued to improve.

The Federal Reserve maintained its cautious approach, acknowledging temporary weakness while reiterating that any future interest rate increases would be gradual and data-dependent. Treasury yields were relatively stable, and investors remained focused on the prospect of policy normalisation later in the year.

United Kingdom

UK equities advanced in April as economic conditions remained supportive and inflation stayed close to zero. Consumer spending was underpinned by lower energy prices, rising wages and improving employment. Political attention intensified ahead of the closely contested general election scheduled for early May.

The Bank of England left interest rates unchanged and continued to signal that monetary tightening was not imminent. Sterling remained broadly stable, while gilt yields rose modestly in line with moves in European sovereign bond markets. Domestic-focused sectors performed well as confidence in the economic outlook remained favourable.

Japan

Japanese equities moved higher in April, supported by continued monetary stimulus, strong corporate earnings and improving shareholder returns. The weaker yen continued to benefit exporters, while institutional investors maintained increased allocations to domestic equities.

Economic indicators pointed to a gradual recovery, though inflation remained below the Bank of Japan's target. Policymakers maintained an accommodative stance and stood ready to introduce additional measures if necessary to sustain progress toward reflation and stronger economic growth.

Emerging Markets

Emerging market assets performed well in April as a softer U.S. dollar and improving commodity prices boosted investor sentiment. Countries with reform momentum and stable macroeconomic conditions attracted renewed capital inflows, while risk appetite improved across equities and bonds.

China and India remained key drivers of performance, while several Latin American and Eastern European markets benefited from a recovery in oil and other commodity prices. Nonetheless, structural challenges and political uncertainties continued to influence returns in selected markets.

Commodities

Commodity prices strengthened during April, with crude oil recording a meaningful rebound after a prolonged decline. Reduced drilling activity in North America and expectations of tighter supply conditions supported sentiment, although inventories remained elevated.

Gold prices were relatively stable as subdued inflation and cautious central bank policies maintained investor interest. Industrial metals also improved modestly, aided by expectations of Chinese stimulus, while agricultural commodities produced mixed results depending on weather and crop conditions around the world.