US equities made limited gains in April despite continued stress surrounding the banking sector after the collapse of Silicon Vally Bank in early March. This time the collapse of First Republic bank looked unavoidable by the end of April but it was eventually acquired by JPMorgan in a deal with the US government.

There was Investor optimism as a result of the Federal Reserve's anticipated moderation of monetary policy, but on the flipside the central bank also affirmed that economic growth is likely to soften. Another 0,25% interest rate increase has already occured in early May and could have been the last one in the US but will largely depend on the inflation numbers which will be announced on May 10. The latest numbers saw a 1% point drop in overall inflation to 5,0% but a resilient core inflation slightly nudged up to 5,6%, hence surpassing overall inflation. Nonethless with a current interest rate at 5,25%, we may soon witness a positive net interest.

The Dow Jones, S&P500 and Nasdaq Composite gained 2,48%, 1,46% and 0,04% respectively while the dollar lost 1,67% to 1,102 USD/EUR.

Also Eurozone shares made gains in April. The eurozone economy squeezed out growth in Q1 with an expansion of 0.1% quarter-on-quarter after zero growth in the final three months of 2022. Germany’s economy saw no growth but other economies such as Spain and Italy saw stronger expansion. Also Eurozone inflation continuous to cool down with a solid 1,6% point drop from 8,5% to 6,9% announced on April 19. Also the ECB is expected to moderate its interes trate increases, though at 3,50% it's still a farcry from exceeding inflation levels.

The DAX, Eurostoxx and CAC40 indices added 1,88%, 1,03% and 2,31% respectively. The Slovene SBITop index added 2,36% to close April at 1229,41.

Chinese equities on the other hand closed the month in red with the Hang Seng Index losing 2,48%. Despite economic growth expanding at a faster rate than expected in the first quarter, ongoing tensions with the US and other Western nations over Taiwan weakened investor sentiment towards the country.

Precious metals once again booked gains as more investors resort to it as a safe haven. Oil gained 1,47% to USD 76,78 per barrel. It made a massive 5 USD leap to 80,42 dollars per barrel on April 3 after OPEC+ unexpectedly announced a production cut but has since then retreated again on economic growth concerns.  

Rudy Marchant
Fund manager Primorski skladi

Monthly reports 2023