Monthly Market Report: April 2024

Markets Volatile in April

Prepared by Brandon Yee, CFA, CAIA, and Thomas Connelly, CFA, CFP


Developed Markets Fall

In the month of April, international developed stock markets returned -2.65 %. Pacific ex Japan and the UK recorded returns of -1.21% and 1.89%, respectively. Japan and the U.S. lagged other markets for the month. International developed markets are up 9.14% over the past year. Japan’s stock market, which is up 19.23% over the past year, is attracting additional investor interest. Executives of Japanese companies are placing increasing emphasis on shareholder returns.


Emerging Markets Continue to Rally

Broader emerging markets posted a 1.54% return for the month. China and India recorded returns of 6.60% and 2.32%, respectively. Brazil and Korea lagged other markets for the month. Emerging markets are up 3.95% YTD and 10.83% over the past year. India’s economy continues to experience robust activity. While China’s economy continues to be weighed down by a shaky real estate sector, economic activity outside of this industry are rebounding. Near historic low valuations relative to the U.S. and international markets may help emerging market investors going forward.


Energy and Utilities Outperform

Global energy and utilities recorded returns of 0.69% and 0.60%, respectively, in April. In the U.S., utilities were the only positive performing sector. Consumer discretionary and information technology lagged other sectors this month. The energy and materials sectors have attractive medium-term fundamentals. Recessionary concerns may be a short-term headwind.



Momentum Outperforms

In April, value underperformed growth in the large-cap space but outperformed in the small-cap space. Momentum recorded a return of -3.07%. Value stocks across the world continue to trade at large discounts relative to growth stocks. Forward earnings assumptions may be too optimistic for growth companies, particularly those in the information technology sector.



Value Stocks Outperform in International Markets

In the international developed markets, value outperformed growth in the large-cap space and small-cap space for the month. Momentum recorded a return of -3.35% while small-cap emerging market stocks posted a return of 0.91%. Small-cap and mid-cap emerging market stocks are up 15.31% over the past year.


Savers Benefitting from Higher Interest Rates

In April, the three-month Treasury bill index returned 0.43%. From the beginning of 2022 through the end of April 2024, the annualized interest rate on the 90-day Treasury bill increased from 0.08% to 5.45%. Savers and retirees are now getting paid much more interest. Real interest rates are positive with the CPI increasing by 3.48% over the past year through the end of March.


Fixed Income Investments Fall

The returns of deflationary hedges were mostly negative for the month. The Bloomberg Barclays U.S. Agg Bond Index returned -2.53% for the month. Long-term government bonds recorded a return of -6.08% as interest rates increased. Municipal bonds were down for the month. Lower credit-quality fixed income like high yield and leverage loans are up for the year but may experience some stress if interest rates remain high.


Gold Bullion Rebounds

Inflation-sensitive investment returns were mixed for the month. U.S. natural gas and gold bullion were up 2.41% and 4.18%, respectively, in April. U.S. real estate was down -7.32% for the month. The Bloomberg Commodity index posted a return of 2.69%. Gold bullion is up YTD with an 11% return. As geopolitical risks increase and become more interconnected, gold bullion may serve as a safe haven. Emerging market central banks have been steady buyers of gold bullion in recent years.


U.S. Dollar Strengthens

Over the past three months, the U.S. dollar appreciated against the Israeli Shekel, Swiss Franc, and Indian Rupee. Over the past year, the U.S. dollar strengthened against the Japanese Yen, Australian dollar, and Chinese Yuan. The continuation of U.S. fiscal and trade deficits may weigh on the U.S. dollar in the medium-term to long-term. Gross federal debt to GDP stands at 120% and is forecasted to increase throughout the decade. In addition, the fiscal deficit is 6.19% of GDP at a time of economic expansion and low unemployment.

Brandon Yee, CFA, CAIA – Senior Research Analyst

Brandon conducts investment due diligence for Versant Capital Management, and designs and implements tools and processes to support the firm’s research. His background in biology and finance help him to look at challenges from multiple angles, resulting in unique and well-rounded approaches and solutions.


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