Market Update April 2024: Sunshine After the Rain

• April a tough month for stocks and bonds
• Delayed interest rate cuts and turmoil in Middle East  
• Europe performs relatively well
• Persistent investors will be rewarded 

April a tough month for stocks and bonds

After three months of robust growth, stock market prices fell this April. Peaks portfolio returns were negative: from -2.1% for those with a Cautious portfolio to -3.5% for those using an Adventurous portfolio. While share price drops are never fun, 2024 is still a good year for the stock market and Peaks portfolios remain in the green compared to the beginning of the year.

Table 1: Net returns of the Peaks portfolios

Good to know: These are the net returns of the Peaks portfolios for the previous month, the year-to-date, and since the start of Peaks; after deducting Peaks’ fees, fund costs, and transaction costs. The value of your investment may fluctuate. Past performance is not indicative of future results.

The table above shows returns for a portfolio of €10,000. The returns do not take into account any deposits or withdrawals made during the month. If you have deposited or withdrawn money this month, your personal return will differ from the figures shown above. Additionally, your personal return will vary if you have invested less or more than €10,000 due to the monthly fixed costs charged by Peaks.

Table 2: Risk of the four Peaks portfolios

Delayed interest rate cuts and turmoil in Middle East 

The main reason for share price falls last month concerned the US Central Bank (the world's leading central bank), which indicated that interest rate cuts would take place later than planned, perhaps not even until next year. This disappointed investors, as lower interest rates contribute to economic growth and the value of companies. 

There was also a lot of turmoil in April due to the ever-increasing tensions between Israel and Iran. This discourages economic growth as conflicts can make consumers more insecure about the future. It makes them more cautious and likely to hold back. 

Europe performs relatively well

European equities did relatively well in April. That's because European producer confidence rose, a signal that economic growth in Europe is accelerating. At the same time, inflation in Europe is stable. This makes it more likely that the European Central Bank will cut interest rates this summer, perhaps as early as June. 

In the United States, economic growth is slightly weaker and inflation higher. The latter in particular makes the US Central Bank, the Fed, still cautious about cutting interest rates. That will only happen once the economy cools further and inflation declines. 

However, US companies are still doing well. Reports for the first quarter of 2024 showed active growth in corporate sales. Results were generally better than investment analysts had expected beforehand. 

Table 3: Net yields of the index funds included in the Peaks portfolios

Good to know: These are net yields of the index funds in which you invest with Peaks in February and April 2024, for the entire year 2024, and since the start of Peaks, after deducting Peaks costs, fund costs, and transaction costs. The value of your investment may fluctuate. Past performance is not indicative of future results.

Persistent investors will be rewarded 

Earlier in April, we wrote that it's important to always bear in mind that after periods of strong price rises, there will also be times when stock markets (temporarily) drop in value. We said that it's important to stay calm in such situations and see the period as a moment when you buy in at lower prices. This is something that will be beneficial when prices recover. In late April, early May, we saw that prices indeed started to rebound. Investors who continued to deposit regularly were thus rewarded for their perseverance.