z-kolkiemz-kolkiem

The week in review

Global economic prospects have worsened according to the International Monetary Fund, which downgraded its global growth forecasts for 2022 and 2023 as a result of the ongoing Ukraine crisis and slowing growth in China.
Published 26 April
3½ mins

What’s happened in markets?

KEY MARKET MOVEMENTS (% change)
 1WK1MO3MOYTD1YR3YR5YR
FTSE All Share-1.140.660.290.569.014.285.05
Euro Stoxx 50-0.09-1.94-8.71-10.09-1.906.175.46
S&P 500-2.74-5.22-2.52-9.994.7515.5814.73
Japan Topix0.47-0.49-0.11-3.381.288.047.46
MSCI Asia Pac.-3.11-5.51-14.06-13.36-20.842.455.70
MSCI Emerg. Mkts.-3.33-4.70-13.12-12.23-17.782.234.99
Jo’burg All Shares-1.48-3.88-1.520.0213.2010.8510.52
UK Gov’t Bonds-0.17-1.70-7.92-9.85-9.13-0.86-0.20
US Gov’t Bonds-0.60-2.70-7.03-8.47-7.630.620.93
Global Corp. Bonds-1.20-3.15-8.69-10.37-9.011.142.10
Emerg. Mkt. Local-2.06-2.77-8.63-8.39-11.77-1.370.39
Figures in the respective local currencies as at the end of trading on 22/04/2022.

In the week of 18 April, the International Monetary Fund (IMF) published its latest World Economic Outlook which stated that global economic prospects had worsened significantly since its last forecast in January. The latest report downgraded its global growth forecast to 3.6% in 2022 and 2023, from 4.4% and 3.8% respectively in its previous report. Expectations had been for the global recovery to strengthen as the impact of the COVID-19 pandemic receded, but Russia’s invasion of Ukraine in late February has set this back with slowed growth and increasing pressure on inflation. The IMF also cited significant divergences between the economic recoveries of emerging markets and developed ones. With renewed COVID-19 lockdowns in China slowing activity there and causing further bottlenecks in global supply chains.

In Europe, the German annual producer price index came in at 30.9%, the highest reading since records began in 1949. This indicates that producer prices for industrial products have increased sharply in the eurozone’s largest economy putting further pressure on inflation. It also reflects Germany’s exposure to the conflict in Ukraine as it relies heavily on Russian natural gas imports for its manufacturing sector.

Meanwhile in the US, President Joe Biden triggered a diplomatic warning from Russia when he described the invasion of Ukraine as genocide and increased the weaponry aid to the beleaguered country.

In other news, Russia is in danger of defaulting on its sovereign debts after a US industry body ruled that it failed to meet its obligations to foreign creditors when it paid them with roubles, rather than US dollars, earlier in April.

The week of 18 April was also a difficult one for China’s economy as the nation’s zero tolerance to COVID-19 and ongoing lockdown strategy sent markets tumbling. In response, at a meeting on Thursday 21 April, the securities regulator endorsed domestic stocks and urged institutional investors to buy more.

In corporate news, the US streaming service Netflix reported a decline in subscribers for the first time, which resulted in its stock falling 35% on Thursday 21 April. This brought its year-to-date losses to -62.5% and made it the worst performer in the S&P 500 this year.

In markets, developed markets (-4.2%) performed slightly better than emerging markets (-5.5%) over the short term, although they continued to deliver better returns over the longer term. Markets continued to be highly volatile with growth stocks (-7.1%) underperforming the most over the last 30 days, while value stocks (-1.6%) were also down. Both small capitalisation stocks (-3.8%) and large capitalisation stocks (-4.3%) performed similarly over the last 30 days. Consumer staples (+4.2%) was the best performing sector, while commercial services (-9.5%) and information technology (-8.2%) were the worst over the previous 30 days. Bonds continue to fall in value to price in the hawkish rhetoric from central banks. The US yield curve is now pricing in 50 basis point rises in interest rates over the Federal Reserve’s next three meetings.

The Japanese yen depreciated for 13 consecutive days, with Japan’s monetary policy currently out of sync with the majority of other major economies.

ECONOMICS  
 Latest

Consensus

Forecast

UK GDP (QoQ)1.3
UK PMI57.6
UK CPI (YoY)7.0
EU GDP (QoQ)0.30.3
EU PMI55.8
EU CPI (YoY)7.4
US GDP (QoQ)6.91.0
US PMI58.359.0
US CPI (YoY)8.5

What’s happened in portfolios?

The market is currently favourable for equities, but we expect the volatility to continue. We have a preference for domestic developed markets, but remain cognisant of the current geopolitical risks in Europe and have moderated our overweight there recently.

For fixed income assets, the economic environment is less favourable. Starting yields are at historically low levels, while inflation remains a clear threat to mid- to longer-duration positioning. We retain our preference for taking credit rather than duration risk and our short duration position continues to help relative performance.

Real assets have been strong and remain an attractive alternative to fixed income to provide diversification and some inflation protection. In particular, our bias towards infrastructure over the last six months has been beneficial given valuations and recovery potential. REITS have also done well on the back of the successful vaccine rollout and the global reopening of economies, as more people return to the office.

Alternative strategies provide another credible diversifier within portfolios in the current environment, with our private equity holdings benefiting from the post-pandemic reopening of economies.

What's happening this week?

28 Apr • US Gross Domestic Product | 28 Apr • US Initial Jobless Claims | 29 Apr • EU Consumer Price Index

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.

 

If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Sources: Nedbank Private Wealth; Bloomberg; Reuters; Financial Times and International Monetary Fund.

The value of investments can fall, as well as rise, and you might not get back the original amount invested. Exchange rate changes affect the value of investments. Past performance is not necessarily a guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios and is referenced for illustrative purposes only, not as a recommendation, not least as it may not be suitable. You should always seek professional advice before making any investment decisions.

Access more of our insights

Investing

The week in review

22 Nov

   |   4 mins

The week of 14 November saw markets cool slightly following the previous week’s rally, as investors searched for signs of a potential economic slowdown and that inflation may have peaked.

Investing

Investment seminar

18 Nov

   |   50¾ mins

In this investment seminar, we reflected on the market stimuli in 2022, as well as the positioning of our investment outlook for 2023 and the opportunities which may arise.

Investing

The week in review

15 Nov

   |   4 mins

Equity markets saw their biggest rally in two years after the US consumer price index for October came in better than expected and raised investor hopes that inflation has peaked.

Investing

October's investment market commentary

9 Nov

   |   2 mins

October proved to be a good month for markets, as risk assets rallied strongly on expectations of a pivot on interest rate policy from central banks. While a semblance of stability was also restored in UK government, with the appointment of a new prime minister and a greater emphasis on fiscal prudence.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.

 

We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.  Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.

* Required fields

Contact Us

Please call us today on +44 (0)1624 645000. Our office hours are weekdays from 8am to 8pm (UK time), except for UK public holidays.

 

Or please complete and submit the below form and one of the team will get back to you as requested.

* Required fields

Search suggestions