Kai W. Hong, CFA
Managing Director & Chief Investment Strategist

While there were a number of macro events for investors to assess (e.g. the Panama Papers leak, an impeachment in Brazil, Brexit, energy company bankruptcies), overall volatility was fairly low. In the US, some industrial indicators were weaker than expected which led to some concerns regarding a potential recession, but labor market measures remained generally positive. Reinforcing the ongoing importance of central bank liquidity, weak growth was seen as a positive by the markets as it meant that the Fed and others would likely stay accommodating for longer. The IMF continued to press for more coordinated action on the part of governments to combat persistent low growth, calls that for the most part seem unlikely to be heeded. Oil prices reached their highest level of the year on increased gasoline demand and declining US inventories. Corporate earnings were mixed with Wall Street banks showing meaningful declines and Apple reporting its first quarterly revenue decline in 13 years.

Following the dramatic moves of the prior three months, markets were somewhat range-bound in April. The Russell 3000 Index finished the month slightly positive at +0.6%. While overall returns were somewhat muted, the spread between the top and bottom performing sectors was greater than it has been over the last twelve months. Energy and Materials sectors led the way with Technology as the main underperformer. US small cap stocks did a bit better as the Russell 2000 Index returned +1.6%. Outside of the US, markets were generally positive with US investor returns benefiting from weakness in the USD. The developed market MSCI World ex USA Index returned +3.2% while the developing market MSCI Emerging Markets Index returned +0.5%.