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LCP Investment Summary - April 2020
Posted on 1 May, 2020 by Administrator
Global equity markets rose 11.0% (in € terms) in April, reversing some of the sharp falls seen over February and March. Markets continued their rise from the lows seen on 23rd March, with investors remaining encouraged by the monetary and fiscal responses from both global central banks and governments despite the release of a slew of record-breaking negative economic data during April.
Markets also rose as many countries began to announce plans to slowly ease the severe personal and economic restrictions put in place to curb the spread of COVID-19. Not surprisingly, Q1 corporate earnings were significantly hit with many companies either cutting or postponing dividend payments. Again, investors were encouraged that earnings, and future guidance, were not as bad as initially feared. Oil prices remained weak over relatively high supply and sharp falls in demand, with the May ‘future’ oil price turning negative for the first time ever on 21st April, in effect paying to take the oil contracts from them.
Longer-dated eurozone bond prices rose 3.4% over the month, with the yield on the AAA Eurozone 15+ Year Index falling to -0.24% by month-end. The Euro Broad Sovereign 10+ Year Index rose by 1.2% with its yield falling to 0.71%.
Longer-dated AAA yields initially rose in April as equity markets continued their recovery and Germany announced that it would issue fresh government debt. Yields then fell midmonth as it became apparent that the Eurozone’s coronavirus package would not include ‘joint debt’, and then fell again sharply at month-end as the ECB announced further stimulus measures. Fitch downgraded Italy’s credit rating to BBB-, just one level above junk status, saying that the increase in Italian debt levels increase doubts about the sustainability of its borrowings.
Sample DC Schemes
Our three sample DC Strategies all rose as most asset classes were up for the month.