Bounce back

Key points

• Covid-19 infection rates have slowed in most countries with some positive news on potential treatments and the fatality of the virus.
• Equities bounced back strongly digesting positive Covid-19 news flow alongside large scale monetary and fiscal stimulus.
• US earnings season has kicked off with the results to date above expectations, albeit earnings expectations have fallen in recent weeks. Technology and healthcare companies have led the way. 
• The action of central banks saw interest rates fall over the month. They are likely to remain low for some time.

Key developments

Share markets recovered in April, reflecting extensive central bank easing, government fiscal stimulus, expectations of a further relaxation of stay-at-home containment policies, the emergence of potential treatments for Covid-19 and some economies getting back to work faster than expected.

Equity market volatility dropped significantly as bond market functioning improved with central banks providing liquidity, allowing asset allocators to operate more normally. Central bank actions also helped interest rates fall over the month.

Global equities (MSCI All Country World Index) gained 10.6% over April in local currency, to be down -13.5% YTD.

The Australian equity market (S&P ASX200) recovered over April, increasing 8.8% over the month (+12.3% in NZD), to be down -16.3% (-14.7% NZD) year to date.