Market update: April 2022

April was a difficult month for the markets. The S&P 500 fell by 8.8%, the worst month since March 2020. Rising costs for consumer goods, the war in Ukraine, and the risk of a higher interest rate increase were all factors influencing the market.

However, because Vive invests broadly across different countries and sectors, we also benefited from positive movements. Most large technology companies posted good results in the first quarter. Additionally, COVID cases continued to decline in Asia. That is good news for global trade and the holiday season. Nasdaq 100 companies are now back to pre-pandemic levels.

‍Best fund performances in April 2022: Northern Trust Global High Yield ESG Bond Index (+0.7%)

Global High Yield performed better due to the depreciation of the Euro, while developed market equities lost value.

‍The developed markets fund had a difficult month. Here, too, the war in Ukraine, rising interest rates, and the risk of a minor recession played a major role. Companies such as Netflix and Amazon underperformed due to poor results, but good results from companies such as Apple and Microsoft partially offset these losses. The Euro fell ~5% against the USD. As a result, the Northern Trust World Custom ESG Equity Index Fund closed the month at -3.3%.

The emerging markets fund continued to struggle due to increasing COVID lockdowns in Chinese cities. Fortunately, strong results from Samsung and TSMC, among others, partially compensated for these losses. The increasing demand for semiconductor chips also provided a positive impact on the price.

The yield on 10-year government bonds has risen between 0.4% and 0.6% in most developed markets, such as the US and Germany. In two months, the interest rate on long-term bonds has risen by more than 1%. A major change thanks to market volatility. This increase continues to negatively affect bond funds. The 10-year interest rate is already at 3% in the US, but it may be capped, which will likely allow the funds to recover.

The return on European money markets remains low. This is because the ECB does not want to raise the short-term interest rate (yet). In contrast to the Federal Reserve, which also plays a role in the fact that the value of the Euro has fallen relative to the USD.

‍What does May have in store for us?

- Every step towards ending the war in Ukraine is essential to reduce the sharp market movements.

- The outcome of the Federal Reserve meeting at the beginning of May will provide clarity on the further course of interest rates.

- Economic data is being closely monitored by the market to detect any signs of a recession, but potential positive effects will also be strongly endorsed.

‍What does this mean for my plans?

‍Do not let a less favourable month disrupt your plans. A well-diversified portfolio is the key to long-term success. A broad portfolio such as Vive puts together will most likely show an upward trend in the long term, even with less favourable periods in between. Remain calm and keep investing.