March market sentiment carried through to April as most major developed equity markets delivered modest but positive returns for the month. The MSCI World ex Australia returned 0.9% in hedged Australian dollar terms. On the back of a strong surge in commodity prices, Energy (+9.4%) and Materials (+9.1%) were the best performing international market sectors.
In the United States (US), labour figures showed signs of slowing as the US Non-Farm Payrolls increased by 160,000, well below expectations for 200,000. Accompanying this release for the month was an adjacent decline in the Institute for Supply Management (ISM) Manufacturing Index to 50.8, also below expectations. Initial estimates for Q1 2016 gross domestic product (GDP) were below historical levels, with a Q1 estimation of 0.5% annualised following 1.4% the previous quarter. The S&P 500 Index returned a modest 0.4% for the period following a downturn late in the month.
March momentum continued into April, with the S&P/ASX 300 Accumulation Index returning 3.3% for the month. There were positive returns across the market spectrum, with the best performer being the ASX 50, returning 3.5% for the month. The best performing sectors were Materials (+14.3%) and Energy (+7.5%). The weakest performing sectors were Consumer Discretionary (-1.7%) and Utilities (-0.3%). The largest positive contributors to the return of the index were BHP, Rio Tinto and NAB, with absolute returns of 23.3%, 21.4% and 4.2% respectively. On the other hand, the most significant detractors from performance were Qantas, CBA and Macquarie with absolute returns of -20.9%, -1.4% and -3.5% respectively.
The broad MSCI World ex Australia Index was up 0.9% in hedged terms and 2.4% in unhedged terms over the quarter, as the Australian dollar depreciated over April. The strongest performing sectors were Energy (+9.4%) and Materials (+9.1%), while IT (-3.5%) and Utilities (+0.4%) were the worst performers. In Australian dollar terms, the Global Small Cap sector rose 3.2% while Emerging Markets returned 1.3%. Over April, the NASDAQ returned -1.9%, the S&P 500 Composite Index returned 0.4% and the Dow Jones Industrial Average returned 0.6%, all in local currency terms. European markets experienced modest returns, with the FTSE 100 United Kingdom (UK) up 1.4%, DAX 30 (Germany) 0.7% and the CAC 40 (France) returning 1.4%. In Asia, equity markets saw mixed results, with the Indian BSE 500 up 2.2%, the Hang Seng Index returning 1.5%, the SSE Composite (China) returning -2.2% and the Japanese TOPIX falling 0.5%.
The Australian dollar depreciated against most major currencies over April, finishing at US$0.763 with a Trade Weighted Index of 63.8. The Australian dollar depreciated 0.7% against the Euro, 2.1% against the Pound Sterling, 4.4% against the Japanese Yen and 0.8% against the US Dollar. On a trade-weighted basis, the local currency fell 0.9% over the month.