This April had all eyes carefully watching the banking sector, after three midsized US banks recently collapsed in the space of five days. To prevent contagion across the financial system the Federal Reserve had to consider tougher rules for regional banks. The coverage from news outlets drew several parallels to the 2008 financial crisis which led to the Great Recession. As fears of history repeating itself were felt strongly, investor confidence dropped and so did many global banks’ share prices.
Fortunately, these fears didn’t materialise. Instead, global markets seem to have adopted a “let’s get on with it” attitude. In some markets, including the UK, consumer confidence is returning. In the US, earnings season, where publicly-listed companies publish their progress and profits in the first three months of the year, is off to an improved start, signalling more market resilience than expected. Broadly speaking, the incoming results across various sectors have been resilient despite the current market pressures. The rise in stock markets has been partially attributed to resurging technology companies, as tech giants Alphabet and Microsoft performed better than expected in the beginning of 2023.
Keep reading to find out how markets have performed this month.
What happened to stock markets?
In UK stock markets, the FTSE 250 Index rose by 2.6% in April, bringing the year-to-date performance over 3%.
Source: BBC Market Data
In European stock markets, the EuroStoxx 50 Index rose by over 1% in April, bringing the year-to-date performance to almost 15%.
Source: BBC Market Data
In US stock markets, the S&P 500 Index rose by 1.5% in April, bringing the year-to-date performance close to 9%.
Source: BBC Market Data
In Asian stock markets, the Hang Seng Index fell by over 2% in April, bringing the year-to-date performance close to 1%.
Source: BBC Market Data
Will the momentum last?
With April demonstrating market resilience, the question to ponder’s whether it’ll last. Investors remain jittery and sizable stock market swings in a single day still abound. It’s not yet clear whether central banks’ long-standing war on inflation has been won, or whether interest rates will need to rise further and stay higher for longer, thereby dampening growth. There are also geopolitical concerns, with many commentators speculating that the transition to a global world order that sees China increasing in prominence could disrupt economic activity. So pension savers may still need to contend with fragile markets for some time and be prepared for a change in market performance and investment returns.
Got a question? Get in touch
If you’re a PensionBee customer, you can read our Top 10 holdings in your pension blog to discover the companies your plan’s invested in, or visit our Plans page to see what investment types and locations your pension’s spread across. You can always send your investment comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
