Issue link: https://info.seic.com/i/1520511
Executive Summary • After the best start to a year for equities since 2019, April was a challenging month for both equity and fixed income markets. Stubborn U.S. inflation figures added to growing fears that central banks will not cut interest rates as quickly as previously expected. • U.S. stock market dominance finally subsided, falling for the month while UK equities lead the way due to the strong share of energy and commodity companies. Fixed income performance suffered at the hands of changing interest rate expectations while commodities benefitted most from geopolitical instability, market uncertainty and the prospect of higher for long inflation. • Earnings reports continued to surprise on the upside for a number of industries, helping to halt the market slide, even though revenues themselves have been somewhat lacklustre. Economic Factors Interest Rates • Markets continued to reign in expectations for the number of interest rate cuts in 2024, especially in the U.S. and UK. Europe likely to be the first major central bank to cut. Inflation • Countries seeming to get a little bit stuck with inflation at current levels, driven primarily by sticky wages, which is feeding into higher for longer inflation. Economic Growth • The strength of U.S. demand and economic growth keeps offering good surprises. Some indications in Europe of positive signs and China appears to be making a far more concerted effort to improve its growth rate. Tactical Views Commodities • Potential supply shocks remain ever-present if conflicts escalate (Ukraine, Middle East) but crucially China is showing some growth – especially relative to recent stagnation. U.S. Large Cap Equities • The Magnificent 7 technology stocks have become the Fantastic 4 as the prospect of higher for longer interest rates and weaker than expected earnings reports fed into prices. Markets also begun to broaden, with interest beyond these seven names. Legend SEI's Current View: Direction of movement from previous: Pessimistic Optimistic SEI Monthly Update. April 2024 This is a marketing communication For use by advisers of regulated intermediaries in the UK in acceptance with all applicable laws and regulations Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic