The main point to take into account in the market evolution in April has to do with the US. If we compare the figures with last month, the country trend changed from 40% to 25%. That was a drop! Such decrease is related to the economic outlook in the (still, but probably for short time) first world economy.
If we take a look at the chart in the American market, there is a downward line at the beginning of the month. March employment data published in those days warned investors about the recovery, because they were far from expectations.
These figures were confirmed by the GDP published at the end of April, the weakest in three years. Under these conditions, Fed Chairwoman Yellen and the FOMC were cautious in the statement on 30th. A rate increase has been delayed.
On the other side of the Atlantic, European markets are still weak, partly because of the contradictory statements from ECB chairman and its members. Although Mr. Draghi has insisted in the readiness for non-conventional measures, Germans are reluctant, despite the low inflation very far from the 2% bar.
Emerging markets were also bearish. Asia suffered from the weakness of the American markets and also from some data from China. Last March, these exchanges benefit from the good expectations about the elections in Indonesia and India, but it must be waited for the results, as the process in India lasts a month and Indonesia publishes the results in some days, four weeks after the vote.
Finally, the lowest point reached in February was the beginning of a recovery in LatAm markets. They registered the best position (29%) amongst all regions. The low prices in this area are moving positively the markets and some of these countries have the best positions in the T-Advisor global trends, as Argentina or Mexico.
Economic outlook for 2014, following the main institutions’ projections, is more positive than the years before. The slope upwards is far from being strong, but there is a consensus in some points.
First of all, US will be back to growth, with projections over 2.5% for the GDP next year. The more optimistic is the Federal Reserve, with a perspective between 2.8% and 3.2%. It is not very surprising, as this institution decided yesterday to reduce the quantitative easing programme. The Fed sustained that the economic improvement is “consistent”. The outlook for the OECD is also similar to the Fed. Just the IMF is a bit far, because its last projection was in October, in the days of the Administration shutdown.
Secondly, the Eurozone will have a low growth for 2014. It also surprises that the ECB is the more optimistic (1.1% GDP growth) against the OECD and the IMF, which agreed in this projection in 1.0%. Last monthly bulletin from the ECB stated that the risks for the Eurozone are still on the downside. The central bank underlined the uncertainties in the global money and financial market.
The point is that the general growth pace is still slow. Emerging economies will suffer in 2014 a slower growth and there are doubts about their reaction with a further tapering from the Federal Reserve and the instability in the currency markets. What Japan refers, Abenomics (the economic policy measures developed by Primer Minister Abe) will hit hard in the inflation, as a result of the monetary expansion, but the country will return slightly to growth.
In any case, the main institutions do not close the crisis yet. Although all try to show a more positive tone, the risks are still persistent, mainly in the credit markets and the investment, but also in the consumption, affected by the general uncertainty. Finally, the point in 2014 is still in the monetary policy measures, as all market agents react strongly to every decision and comments from the central banks.