The extraordinary start to 2019 for global financial markets continued into April, with strong rises in most risk assets, led by equities, which have enjoyed their best start to a year in decades. All the major equity markets produced solid positive returns with developed equities again outperforming emerging markets, returning 3.5% versus 2.1%. US equities returned 4% in US dollar terms and hit another record high late in the month. The strong performance in the US was however exceeded by Europe, advancing 4.3% in euro terms, buoyed by signs that the sharp slowdown in growth across the eurozone was stabilising. Japan again underperformed, up 1.7% in April and 9.5% year-to-date, the latter making up half of the returns of the US (18%) and Europe (17.2%). Japan has been held back by slower growth this year, below 1% per annum, hurt by the slowdown in China and softness in global growth. The market’s underperformance leaves it attractively valued relative to other developed markets. China was the only market of note which slipped in April, however, this has followed a very strong first quarter performance, returning close to 30%.

Equity markets made further progress in March, despite a return to higher levels of volatility as concerns about the slowdown in global growth intensified. Developed market equities returned 1.3% over the month, taking the Q1 2019 return to 12.5% and recovering much of the ground lost in Q4 2018. US equities advanced 1.9%, supported by encouraging signs of progress in US-China trade talks and the increasingly accommodative stance of the Federal Reserve. In US dollar terms, Japanese equities underperformed the other major regions returning 0.6% while emerging markets returned 0.8%. Despite ongoing Brexit related uncertainty, the UK was a notable outperformer, up over 3% in sterling terms, with the UK’s big overseas earning companies boosted by weakness in the pound during the month.