Monthly report for April

The YTD return in P+ Balance was -0.7 percent at 30 April representing a 0.2 percentage points drop compared to the end of March. 

The month's portfolio returns accounted for -0.7 percent for equities, -0.4 percent for special investments, -0.2 percent for credit bonds, 0.6 for real assets and 1.6 percent for bonds. 

April was characterized by significant fluctuations on the financial markets, triggered by Donald Trump's announcement on 2 April about general tariffs and the subsequent global response. The markets reacted very negatively to the initial announcement as the level of the tariffs was high compared to expectations, while the method behind the determination of the tariffs was also met by some scepticism. China, which was hit particularly hard, responded by introducing additional tariffs against the US, resulting in an escalation of the tariff levels between the world's two largest economies. After a week of significant uncertainty and notable market volatility, but without further retaliation from other countries, Donald Trump decided to introduce a 90 days negotiation period where the tariff rate was fixed at 10 percent for all countries - except from China. This implies that we, by the end of April, found ourselves in a waiting period with 10 percent tariff rates, while a wide range of trade agreements must be concluded within a relatively short time frame. 

The initial market reaction was significant with i.a. the US stock market index S&P 500 dropping by 12 percent in few days. Despite the high level of uncertainty, the market managed to recover in the 2. half of April following the announcement of a 90 days negotiation window as well as a number of key economic indicators remaining reasonable. Thus, the markets quickly regained a large part of the losses, making the return for April far less severe than feared. 

In spite of the markets' rapid turn-around, the uncertainty about the US political agenda is still very much present. And by the end of April there was still no specific information about the negotiations between the US and its trading partners.