After the events of the first quarter of 2020, world stock markets bounced back in April.
The US market was the standout performer, enjoying the best month since 1987. Over March the S&P 500 rose by more than 14%. Indeed, the index is up by 30% from its 23 March low, meaning that the US is back in a bull market (a rise of over 20%).
Europe and the UK achieved less dramatic gains of around 5% but were close to entering bull market territory.
Emerging markets performance was held back by China, which fell by less than 10% in the first quarter and thus has less ground to recover.
If the equity markets looked to be seeing a brighter, post-Covid-19 future, that view does not appear to have been shared by the bond markets. Across March yields were generally flat or fell slightly. So far, the bond markets do not seem worried that the flood of money coming from central banks and governments will rekindle inflation. That may be self-referencing, given the biggest buyers in the bond markets are once again central banks. This is thanks to the latest rounds of quantitative easing (QE).
April’s recovery in many equity markets is a reminder of the near impossibility of getting market timing right. Anyone who hit the panic sell button in mid-March will now be feeling regretful. Little more than one month on from that 23 March low, there is now talk of investors returning based on some pre-Covid-19 jargon – FOMO (fear of missing out).