April was characterised by the release of Quarter 1 earnings reports from the world’s largest companies. Earnings were broadly mixed, however many companies, particularly tech firms, beat low expectations. Globally, equities saw marginal positive returns with volatility moderating significantly. The outlook for many economies deteriorated in April as indicators suggested contraction in the likes of the US and the UK. Despite this, core inflation remained sticky, leaving a tough task for central banks. Services PMIs in the US suggest that activity in this sector remains robust, which has contributed to stubbornly high inflation figures. On the other hand, manufacturing activity appears to have slowed, pointing to an economic slowdown. Notably, April did see fears that were associated with the March banking turmoil subside. In addition to company earnings, focus shifted back towards monetary policy for many investors with major Central Bank interest rate decisions due in May. Slower growth prospects globally, has meant that a change in the prevailing tight monetary policy seen throughout much of 2022 is now a real possibility. For the most part however, interest rate expectations remained elevated.
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