Posted on: 14 May 2015
Global investment markets had a turbulent April, with economic
and political disappointments causing significant investor
In the US, poor GDP results were blamed on bad weather. The US
economy expanded just 0.2% in Q1 2015, though when compared with Q1
2014, GDP was 3.1% higher. Against the backdrop of a stronger
dollar and cuts in oil and gas investments, weaker economic growth
was not surprising.
However, US equities had a positive April, thanks to
better-than-expected earnings growth from US companies, and dovish
comments from the Federal Reserve about the likely timing of
interest rate rises. Some economists also believe that the economic
weakness of Q1 will improve this year, thanks to stimulus in China
In Europe, volatility was evident in April: the German equity
market fell over 4% due to fears of Greece leaving the Eurozone.
The German economy has benefited from the European Central Bank's
(ECB) quantitative easing programme. Despite the sell-off in April,
German equities are still up 32% in euro terms since October 2014,
suggesting some profit taking was due, though investors may be
nervous as Greece continues bailout discussions with the IMF.
There was also a broad sell-off in bond markets in April. For
some time, yields on European sovereign debt have been historically
low. Negative interest rates at the ECB have exacerbated investors'
search for yield, causing them to push down the yields on bonds,
while banks are facing stricter regulatory requirements, increasing
their need for low-risk assets like bonds. Finally, worries about
deflation have prompted investors to seek security in bonds. This
combination of factors was up-ended in April as risk aversion
increased and the oil price climbed 16%.
In the last full month before the General Election, UK equities
performed well, up 2.6%, while sterling bounced back by 2% versus
the dollar. In the months leading up to the vote, the stock market
has performed well relative to the rest of the world, thanks to its
global revenue sources.
Looking ahead, some of the fog surrounding investment markets
should clear. The new UK Government will begin to lay out its
policies in the weeks ahead and the Federal Reserve may move closer
to increasing interest rates in the summer, as unemployment trends
lower and wages move up.
 Capital Economics, "Fears of an extended global
slowdown look exaggerated", 1st May 2015.
All data has been compiled by Duncan Lawrie from
sources believed to be reliable.
Full details of sources are available on
The comments and figures in this document are
generally applicable but you should always take specific
advice to suit your
individual circumstances before taking any action. Errors and
The value of investments and income generated may
fall as well as rise, and investors may not get back
the amount invested. Past
performance is not a reliable indicator of future