“April saw a mixed and somewhat unpredictable investment picture. As a result of a strengthening Sterling relative to other major currencies and a fall in US and European equities, overseas stock markets fell by 1.1% over April.
“In Europe, German Bund yields rose sharply during the month, rising from almost zero to 0.38% at month end following positive economic data and nervous investors exiting their positions. The possibility of Greece defaulting on its debt remains a key risk for the Eurozone bond and equity markets. Further afield, strong gains continued to be made with the FTSE China index up 14.0% over the month despite slowing Chinese retail sales and fixed asset purchases as investors anticipated further monetary and fiscal stimulus to boost flagging growth.
“Going forward we expect continued volatility in the markets in anticipation of the outcome of the UK general election and uncertainty around the UK’s continued membership of the Eurozone.”
Highlights include:
• Overseas stock markets fell by 1.1% over April in Sterling terms
• In the US, the S&P500 trended lower at the month end following weaker than expected first quarter GDP data
• The FTSE Eurofirst 300 index reached a 15 year high before falling back to reflect a reduction of 0.9%
• The FTSE China index was up 14.0%
• The FTSE All Share Index produced a gain of 3.0% for the month of April
• Gilts experienced an increase in yields in line with German Bunds and US Treasuries
• UK corporate bond yields rose from 2.95% p.a. at the end of March to 3.15% p.a. at the end of April 2015
• Global high yield bonds fell from 6.86% to 6.54% and spreads reduced by 0.41%
• Capital valuations have risen significantly over the last year, resulting in yields falling as low as 2.5% for prime London shops and 3.5% for London offices compared to over 5% outside London
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