The global economy showed positive growth in April, with economic data revealing surprising resilience in the face of higher interest rates. The U.S., Eurozone, and UK Purchasing Managers Index (PMI) surveys exceeded expectations, while China’s Q1 GDP print beat estimates. The inflation picture continued to moderate across developed markets, with falling energy prices contributing to lower CPI prints in the U.S. and Eurozone. Oil should continue to be a drag on inflation in the coming months due to the high base set in 2022, even after OPEC+’s recent production cut announced at the beginning of April.

On the market front, developed market equities (MSCI World) advanced 1.8% over the month, boosted by positive economic momentum, while emerging markets (MSCI EM) fell 1.1%. Value (MSCI World Value +2%) marginally outperformed growth (MSCI World Growth +1.6%), while global bonds (Barclays Global Aggregate) managed a 0.4% gain over the month.

In the U.S., all three major indices ended the month higher – the growth heavy S&P 500 gained +1.5% m/m, while the more value orientated Dow Jones, rose +2.5% m/m, its best monthly performance since January. The tech-heavy Nasdaq Composite ended the month unchanged (+0.04% m/m).

U.S. inflation continued to cool in March, coming in at 5% y/y from 6% y/y in February, the slowest pace since May 2021. Excluding food and energy, core CPI accelerated 5.6% y/y, as expected. Minutes released from the Fed’s March meeting revealed that the central bank is now forecasting a “mild recession” later this year bought on in part by the tightening in lending conditions. In other economic news, the latest U.S. GDP report showed that the economy is losing momentum, with Q1 GDP slowing to 1.1% compared to 2.6% in the prior quarter, while the unemployment rate fell to 3.5%, against expectations that it would hold at 3.6%.

Roughly half of the S&P 500 companies that have reported quarterly results and earnings for the period are down 1.7%, while revenues are up 4% versus the same quarter a year ago. This highlights that there’s an encouraging level of ongoing demand, but corporate profits remain under pressure from higher costs.

In the Eurozone, preliminary data showed that the economy grew by 0.1% on a quarterly basis in Q1 of 2023, missing the expected 0.2% growth estimate. Inflation in the bloc eased considerably to 6.9% y/y in March from 8.5% y/y in February. Core inflation, however, increased slightly from 7.4% y/y to 7.5% y/y, which has kept European Central Bank policymakers hawkish. In equities, stronger economic sentiment and a value tilt helped the Euro Stoxx 50 gain 1.03% over the month.

In the UK, March’s headline inflation came in below estimates, rising 10.1% y/y from 10.4% in February. The UK has the highest inflation rate among G7 countries, creating doubt over whether the Bank of England (BOE) will pause rate hikes soon, as they have been suggesting. The blue-chip FTSE-100 Index rose 3.1% in April.

On the emerging market front, China’s Q1 2023 GDP growth exceeded expectations, rising 4.5% q/q compared to the estimated 4% q/q. Retail sales surpassed expectations with a 10.6% y/y surge, but industrial production fell short of consensus with a 3.9% y/y gain in March. However, the overall GDP growth surge is a positive sign that the country is returning to normal and is on track to achieve its growth target of 5% for the year. China’s Shanghai index climbed 1.5% over the month.

In South Africa, inflation increased faster than expected in March, with headline inflation rising 7.1% y/y (expectations: 6.9% y/y) from 7% y/y in February. Higher than expected food prices pushed the index higher, with food and non-alcoholic beverages rising by 14% y/y, contributing 2.4% to the total. Core inflation remained unchanged at 5.2% y/y. Local retail trade sales fell for a third consecutive month in February (-0.5% y/y) following January’s 0.8% y/y decline. In other news, amidst an increase in rolling power cuts, the IMF cut its SA 2023 growth forecast to a slight growth of 0.1%.

South Africa’s JSE All-Share Index rallied +2.78% in April, supported by a surge in Resources (+4.2%) and Industrials (+3%). Gold and platinum group metal (PGM) stocks outperformed, lifted by an upswing in commodity prices. However, sentiment was somewhat mixed for SA Inc shares due to ongoing load shedding weighing on investor sentiment. SA listed property caught a much-needed bid, gaining +4.66% over the month. Against the U.S. dollar, the rand weakened by 2.7% m/m, while year-to-date, the local currency is now down 6.9%.