April 2016 market overview

April was the month of commodity price recovery. Oil, particularly, enjoyed plenty of attention. To address the recent oil glut, oil producing countries met in Doha mid-month, but an agreement to temporarily freeze oil output failed after Saudi Arabia refused to sign the agreement in the absence of Iran. Still, Brent Crude continued its price recovery to end the month 9.2% higher. Expect to pay more at your local petrol pump and your grocery store if this trend persists.

In SA, the political arena was as eventful as ever. In an unusual address of the nation on 1 April, president Zuma apologised for his handling of the Nkandla ruling by the Public Protector. During the month several financial institutions cut ties with Oakbay Investments, owned by friends of the president, the Gupta brothers. This happened shortly after allegations surfaced of the Guptas offering cabinet minister positions if the candidates agree to further the Guptas’ interests.

In terms of economic data, SA consumer price inflation decelerated to 6.3% y-o-y in March (data was released in April). Fruit and vegetable lovers felt the pinch most, with these prices rising by 18.7% for the year to March 2016. Some good news is that SA recorded a trade surplus of R2.9bn, including trade data with Botswana, Lesotho, Namibia and Swaziland.

Internationally, in the US the Federal Reserve decided to keep rates unchanged and chair Janet Yellen’s statement sounded more optimistic about global growth. In the East, Japan surprised markets by not accelerating its stimulus programme – for now. April was a particularly big month for Argentina, as it returned to the international credit scene for the first time since its default in 2001, selling $16.5bn in bonds to eager emerging market debt investors.

April was a month in which most markets traded upwards. The FTSE/JSE All Share Index gained 1.7% on a total return basis. With the 3.4% appreciation of the rand during the month, dollar investors in the ALSI gained 5.1% for April. The top performing sector for the month was Industrial Metals, gaining 45.4%, and the worst performing sector was Household Goods (-8.1%). The All Bond Index (ALBI) and inflation-linked bonds returned 1.88% and 3.29% respectively this month. Cash returned 0.57%.

Looking at global markets, the MSCI World Index and MSCI Emerging Markets Index posted a positive 1.6% and 0.5% respectively for April on a total return basis (USD).

Source: Stats SA, I-Net, Bloomberg, Deutsche Bank and Sanlam Investments | One-month total returns up to 30 April 2016