Throughout April and into May, the global stock markets were engaged in a tug-of-war, heavily reliant on economic data and corporate earnings, particularly in the United States. On one side, a strong job market, coupled with stagnant core inflation and impressive corporate earnings, provided support for a potential U.S. Federal Reserve rate hike. On the other side, concerns of a recession grew as growth slowed down.

Towards the end of the month, there was an update on the regional bank crisis in the United States. First Republic Bank's Q1 results revealed unexpectedly large deposit outflows, leading to a sharp decline in the bank's share price and reigniting concerns about the U.S. banking sector. Subsequently, JPMorgan Chase & Co. agreed to acquire First Republic Bank through a government-led transaction after financial regulators took control of the bank.

This is not the start of another 2008 financial crisis.

For the next while it is expected there will be continued volatility while the results of increased interest rates continue to be felt in the economy.

Let’s look at each market:

CANADIAN MARKET 

+2.9% (S&P/TSX Composite 30-04-2023)
The S&P/TSX Composite Index advanced 2.9% during the month. All sectors, without exception, recorded gains during the period. Financials, Energy and Materials were the main contributors. The Canadian bond market also had a positive return for the period, with the FTSE Canada Universal Bond Index ending the month up 1.0%. 

U.S. MARKET 

+1.8% (SP 500 30-04-2023 in CAD)
On the strength of corporate earnings that beat expectations, U.S. stocks ended the month up 1.6% as measured by the S&P 500 Index. Most of the results looked resilient, particularly those of the U.S. Big Tech stocks, despite uncertainty about the future of the economy. 

Health care, Financials and Communication Services were the main contributors, while Industrials and Consumer Discretionary detracted from the return the most. The currency effect had a negligible impact on the return to Canadian investors, which was 1.8% for the month.

EUROPEAN MARKET 

+4.5% (MSCI Europe 30-04-2023 in CAD)
The European market continued its momentum, closing the month with another gain. The MSCI Europe Index advanced 2.6% in local currencies. The Canadian dollar’s weakness against the euro and the pound sterling boosted the return to 4.5% in Canadian currency. Health care contributed the most to the return, followed closely by Financials and Consumer Staples. Only Information Technology had a negative return. 

ASIAN MARKET 

-0.8% (MSCI Asia-Pacific 30-04-2023 in CAD)
The results were more mixed for the Asian market. The MSCI All Country Asia Pacific Index ended the month with a return of 0.1% in local currencies and -0.8% in Canadian dollars. As on the Western markets, Financials rebounded from the March rout and contributed the most to the return. Even so, negative returns for Communication Services, Information Technology and Consumer Discretionary dragged the index down. From the regional standpoint, India, Japan and Indonesia were the main contributors, while China and Taiwan detracted from the return.

EMERGING MARKETS 

-0.9% (MSCI Emerging Markets 30-04-2023 in CAD)
The situation was similar in emerging markets, with the MSCI Emerging Markets Index ending the month with a return of -0.7% in local currencies and -0.9% in Canadian dollars. The decline was due mainly to weak performances by the stock markets in China and Taiwan, despite relatively solid performances by India, Saudi Arabia and Brazil. Even though China has reopened its economy and ended the pandemic-related restrictions, weaknesses in the global economy weighed on its manufacturing industry. 

Here are the market results to May 12, 2023: