Monthly markets review - Overview of markets in April 2017

The S&P 500 recorded a gain of 1.0% over the month. US equities advanced despite some disappointing macroeconomic data. It was revealed non-farm payrolls1 grew significantly less than expected in March while the initial estimate for first quarter GDP growth of 0.7% (quarter-on-quarter annualised) was also below forecasts.

Activity indicators failed to build on their previous run of strength. The Institute for Supply Management reported its manufacturing purchasing managers’ index (PMI) fell back slightly in March to 57.2 (from a two-year high of 57.7 in February). Meanwhile, the Conference Board consumer confidence index fell in April from its new multi-year high in March and the University of Michigan’s index of consumer sentiment only inched ahead.

The disappointing GDP data (which represented a sharp deceleration from a 2016 Q4 annualised rate of 2.1%) was in part attributed to seasonal factors. As the market rose, the information technology sector outperformed, helping propel the Nasdaq Composite index through 6,000 for the first time. The energy sector underperformed with crude oil prices further weakening as US output increased and the country’s rig count continued to rise.