April started with President Joe Biden's proposed 2,25 Trillion dollar infrastructure plan, described as »the single largest investment in American jobs since World War II«. Then plan that includes transport, drinking-water, broadband, manufacturing and construction infrastructure developments. These positives have boosted market confidence. However, as would be expected, Republicans are fully opposed to the plan and, as was the case with the previous $1,9 trillion pandemic relief plan, Biden may have to rely on complete Democratic support in the Senate to push it through. However, with the infrastructure Plan also including a raise of corporate taxes from 21% to 28%, even some democrats have voiced opposition of the current proposal.

The US government has also accelerated COVID-19 vaccinations. The speeding up of the process implies chances of a faster-than-expected reopening of the U.S. economy. This along with the easing of the pandemic will significantly ramp up business activities. The Federal Reserve raised expectation of GDP growth to a 6.5% annual rate this year. 

Therefore all eyes remain focussed on inflation. Despite the improving economic outlook and inflation shooting up, the Federal Reserve announced it will keep rates unchanged and continue the asset purchase program in which the central bank buys at least $120 billion of bonds a month.

Overall the markets closed April with modest gains. The Dow Jones gained 2,71% and the S&P500 5,24%. The tech-havy Nasdaq also gained 5,40%, catching up somewhat from its previous month's underperformance. The dollar on the other hand lost 2,47% to 1,2018 against the Euro.

Also in the Eurozone inflation is gradually increasing as lockdown measures are being eased and economic activity is accelerating. The consumer price index climbed from 0,9% to 1,3% in March and accelerated further to 1,6% in April.

European indices tracked the US performance with the Eurostoxx 50 gaining 1,42%, the German DAX a modest 0,85% and the French CAC40 3,33%. The Slovenian SBITOP outperformed in April, adding 7,49%, driven by the strong performance of Krka. The British FTSE index increased by 3,82% with the Pound Sterling remaining almost unchanged against the Euro at 0,8697. 

Meanwhile the Asian markets underperformed the European had American markets. The Japanese Nikkei index dropped by 1,25%. 

On the commodities market, oil rebounded of its March drop with WTI Cushing climbing 7,47% to 63,58 dollars per barrel, contributing to the inflation concerns. Gold and silver also gained by 3,20% and 5,47% respectively.

Rudy Marchant
Fund manager Primorski skladi d.o.o. Koper

Monthly reports - April 2021