Selected Market Indicators for Periods Ended 30 April 2021

After a positive March, global share markets continued to perform strongly in April with all major markets (with the exception of Japan) showing positive returns. Investors are feeling positive about the strength of the post-pandemic economic recovery.

The MSCI World index (an indication of global shares) returned 2.2%.

Trans-Tasman shares were positive in April, albeit softer than March, as investors wait to see the impact the Trans-Tasman bubble will have on company earnings. New Zealand and Australian equities were up 1.4% and 2.4%, respectively (in unhedged NZD).

Global shares modestly rose in April by 1.9% as the fight against the Coronavirus reached a significant milestone with vaccinations surpassing 1 billion doses globally. Developing nations continue to struggle with the fight against the Coronavirus, with calls for developed nations to contribute more to help the poorer nations.

Global Property and Global Infrastructure delivered strong results, up 5.7% and 2.7%, respectively, as investors continue to take advantage of loose monetary policy amongst buoyant asset prices. Furthermore, an Infrastructure deal between the EU and India may boost Global Infrastructure, as the deal plans to compete against China’s ‘Belt and Road’ initiative.

Significant Developments for April include:

• A “Lack of foresight, a lack of leadership”, former governor of the India’s central bank Raghuram Rajan told Bloomberg, referring to the country’s surge in COVID-19 cases. With new daily cases reaching 400,000 in April, many countries have imposed travel bans from people who have visited India, with Australia going so far as banning their own citizens from coming back to their home country if they have visited India. Furthermore, a lack of oxygen supply has hospitals in India running at full capacity, with analysts modeling that daily cases and deaths are likely to be higher than the stated figures.

• As large portions of the globe moved to a “work from home” arrangement during the past year, the strain has been felt in the semiconductor industry. As a key component in computers and monitors, the semiconductor industry is now struggling to meet demand needs around the world. The strain is being felt across many sectors, with Apple’s Chief Financial Officer, Luca Maestri, warning that semiconductor shortages will remove $3-4 billion of revenue in the third quarter. Car rental companies are also being forced to purchase second hand cars as manufacturers feel the pinch.

• From Oil and Corn, to Lumber and Copper, the price of raw commodities skyrocketed in April as demand for raw materials rise on the reopening of the global economy. With financial support from governments kicking into gear all around the world, a “Commodities Super cycle” call by Goldman Sachs has started to ring true, with the likes of UBS predicting that commodities as a whole will rise 10% in the following year.

• The highly anticipated Trans-Tasman travel bubble began during the month, seeing hundreds of travelers reunited with loved ones for the first time since the pandemic began over a year ago. It is hoped that with this bubble, the struggling tourism companies throughout New Zealand and Australia will see some much welcomed business in the coming months.

Trans-Tasman Equities

Trans-Tasman equities were positive in April, albeit softer than March, as investors wait to see the impact the Trans-Tasman bubble will have on company earnings. New Zealand and Australian equities were up 1.4% and 2.4%, respectively (in unhedged NZD).

Global Equities

Global equities modestly rose in April by 1.9% as the fight against the Coronavirus reached a significant milestone with vaccinations surpassing 1 billion doses globally. Developing nations continue to struggle with the fight against the Coronavirus, with calls for developed nations to contribute more to help the poorer nations.

Property and Infrastructure

Global Property and Global Infrastructure delivered strong results, up 5.7% and 2.7%, respectively, as investors continue to take advantage of loose monetary policy amongst buoyant asset prices. Furthermore, an Infrastructure deal between the EU and India may boost Global Infrastructure, as the deal plans to compete against China’s ‘Belt and Road’ initiative.

NZ Bonds and Cash

General Inflationary concerns seemed to ease off in April, as bond yields started to taper off across the board. The New Zealand 10-year yield ended the month at 1.62%, down from 1.78% at the start of the month. For comparison, the yield at the start of the year for the New Zealand 10-year was 0.99%.

Global Bonds

Global bond yields were mixed in April as inflationary concerns eased, with some Fed officials continuing to reiterate their view that any inflationary pressures are merely “transitory”. US 10-year bond yields fell from 1.74% at the end of March to close April at 1.63%, while Denmark, France and Germany all saw rising bond yields over the period.

Currency

The NZD ended April stronger across a majority of currencies despite the Reserve Bank of New Zealand continuing to leave rates at a record low of 0.25%. Notable mentions include the USD, GBP, AUD and the Yen, which the NZD strengthened against by 2.4%, 2.1%, 1% and 1.3%, respectively.