Viewpoint – April 2016

The recovery in markets, which started in February, continued into March and by month end many equity markets had recovered much of the ground lost in the big sell-off at the start of the year. A rally of 12.6% in the MSCI World index from the February lows to the end of March left the year-to-date return at -0.3%.

Emerging markets led the way, with a return of 13.2% in March alone, taking the year to date return to 5.7%. Among the major developed equity markets the US produced the best return, 6.7% in March, bringing the S&P 500 index to within a whisker of its all-time high. Europe and Japan also rallied, but less strongly in local currency terms: continental Europe up 1.9% in euro terms in March; the UK up 1.7% (sterling terms) and Japan up 4.8% in yen terms. Credit participated fully in the rally in risk assets, with investment grade bonds up 2.8% in March, high yield up 4.4% and EM debt up 3.2%.