Fidelity Bank - Trust and Wealth Management
April 2019 Market Review
After a strong first quarter, U.S. Stocks continued their 2019 rally gaining 4.05% in April. The Federal Reserve continued to affirm a neutral and patient outlook for monetary policy. This policy stance helped usher risk assets higher as equity markets climbed across the globe.
In fixed income markets, the Bloomberg Barclay’s Aggregate bond index provided just a 0.03% return in April. High yield spreads narrowed as the asset class gained 1.42%. Treasuries declined by 0.28% as investors moved to riskier assets.
International markets shook off continued consternation of Brexit and embraced global trade optimism as markets gained in April. International Developed Markets increased 2.81% and Emerging Markets were up 2.11%.
As Large Cap US equities climbed 4.05% in April, Growth stocks led the way jumping 4.52% as represented by the Russell 1000 Growth Index. Diving deeper, the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) continued to lead the market. The FANG+ Index rose 4.64% in April.
After a soft March, Small Cap stocks rebounded in April with the Russell 2000 up 3.40%. When looking at the Growth and Value sides of the index Value outperformed Growth by 73 basis points (Russell 2000 value: + 3.78 Russell 2000 Growth: +3.05%); however, outperformance was not enough to erase the year-to-date deficit. Small Cap Growth still leads Small Cap Value by more than 4.5% (Growth: + 20.71%, Value: +16.16%).
Dollar strength detracted returns from U.S. investors in both Developed Markets and Emerging Markets. The MSCI EAFE index returned 3.38% in local currency terms, but only 2.81% in U.S. Dollar terms. The MSCI Emerging Markets index returned 2.56% in local currency, but the conversion to U.S. Dollars reduced that return to just 2.11%. After a roaring start to the year (+27% through March), Chinese stocks lost 71 basis points during April, however, at one point during the month Chinese stocks were up nearly 6%.
Investors’ risk-on appetite returned in April as corporate bonds and high yield added another strong month in April, gaining 0.49% and 1.42%, respectively. Although short and intermediate rates rose modestly during the month, the 1-month to 6-month Treasury rates ended the month inverted over their 1-year to 7-year peers. On the longer end of the curve, 10-year rates and 30-years rates experience a bit more dramatic increase of 9.7 and 11.4 basis points, respectively as investors sought out riskier assets.
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April 2019 Market Review is intended solely to report on various investment views held by Fidelity Deposit & Discount Bank and is distributed for informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. Fidelity Deposit & Discount Bank does not have any obligation to provide revised opinions in the event of changed circumstances. All data is provided by Bloomberg Finance, LP and Morningstar Direct. We believe the information provided here is reliable but should not be assumed to be accurate or complete. Data as of 4/30/2019. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Past performance is no guarantee of future results. All investment strategies and investments involve risk of loss and nothing within this report should be construed as a guarantee of any specific outcome or profit. Investors should make their own investment decisions based on their specific investment objectives and financial circumstances and are encouraged to seek professional advice before making any decisions. Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. The S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large‐cap segment of the U.S. equities market.