Every now and then things turn out as you expect. And the anticipated Fed meeting on Wednesday delivered just that – an expected wait-and-see approach on interest rates (for now). Chair Powell reassured markets that whilst cuts are unlikely right now, a rate hike isn’t on the immediate horizon either. All relatively calm and anticipated. Stocks and bond yields entertained us with hefty moves during the press conference, then returned almost exactly to where they started the day by close of play.
Sticking with the US, the S&P recorded its worst month since September 2023 falling by 4.2% in April. As we mentioned last week, ideally we'd see a descent into the 4700-4800 range for a rebound towards 5361. A move below 4700 could change our cautiously optimistic road map however.
The "Spring Breather" also continued for most other major markets. The exceptions? China, and the FTSE 100, both managing a slight gain.
Every day this week there has been relative strength of the FTSE 100 vs main European indices. Why? You can never know precisely but it could be a sense of both value investing continuing its resurgence (as the FTSE 100 is a value-heavy index) and also investors accepting of the almost certainty of a Labour government. As we said back in this Friday note in March, the historical guide that the election of a left-leaning government will hit the stock market may not come to pass.
Unsurprisingly both UK and US funds make an appearance in our What’s Hot, What’s Not fund edition this month but on different lists. Gold dominates again, and China continues to find its footing as it leads the way in the sector edition. For the first time in six months, data shows the Chinese economy has shifted from contraction to expansion.
Japan took a dip over the past month from the historic highs it reached in March, and there have been murmurs that the BoJ stepped in twice this week to prop up the struggling currency. Japan’s government stayed tight lipped, refusing to confirm whether it was behind the rallies, though we think many have read between the lines with this one.
History offers some intriguing insights into seasonal market trends and “Sell In May And Go Away?” is an extraordinary one. The statistics for selling in May and not buying until October are compelling, especially if you value peace of mind over your summer holidays. Perhaps the context this year makes this strategy even more compelling.
We delve into the potential merits of this seasonal strategy here.
Finally, investors would be happy with the 3 Dynamic Portfolios due for review this month, all of which outperformed their benchmarks including Dynamic Japan 3-month, Dynamic UK Blended and Dynamic World ex-UK.
Even through a tricky last month, Dynamic Japan managed a remarkable 11x return on the index over just 3 months and has delivered an impressive 405% since inception. See more here.