April Market Commentary

Commentary by Levendi Investment Management Ltd  – A Thornbridge Appointed Representative

Capital markets enjoyed a breather in April with the UK markets (our best performer) reversing last month’s losses, rising 3.13%. Alongside it, European and American markets posted 1.03% and 1.46% gains respectively. The Fund was able to log a c.1% rise against this backdrop. A few factors contributed to this. After a difficult March, UK markets were able to enjoy a relief rebound on the banking risks abating, but also thanks to Oil & Gas posting strong gains during the month. The faint signs of a pick-up in M&A activity has and could continue providing a tailwind to UK markets, a market unanimously agreed to be cheap relative to comparables. Companies in our other markets also reported their first quarter earnings, leading to upbeat markets not necessarily on stellar earnings, but on beating perhaps overly negative expectations.

Nevertheless, it is too soon to conclude we are out of the ‘economic woods’ yet. A stubbornly high inflation, especially in the UK where it stayed above 10% year on year despite energy prices normalising. Core inflation, the one that matters to the BOE and policy, isn’t budging due to not only a Brexit burden, but also due to inflation feeding off a wage spiral, itself feeding off high prices – a potentially vicious cycle. The story is only slightly rosier in Europe and the US, where the unemployment rate has reached close to a multi-decade low of 3.5%. This coupled with some geopolitical stress remaining high, means the right course of action as we see it is remaining cautiously optimistic.

Author: Alex Hackett

Alex is a member of the investment funds team. She is involved in the portfolio construction process, regulatory reporting, trade surveillance and monitoring.