Monthly Market Review - April 2024
After a bullish start to the year, most markets in April 2024 experienced a correction. The MSCI World Islamic Index declined by -3.88%, reversing its earlier upward trend. Similarly, the Dow Jones Sukuk Index saw a drop of -1.59%, due to rising inflation expectations and an uptick in U.S. Treasury yields.
In a recent update, Federal Reserve Chairman Jay Powell addressed the stalled progress toward the Fed's 2% inflation target, largely due to stubborn inflation. The Fed has kept its benchmark rate steady at 5.25% to 5.5% and plans to align future rate adjustments closely with incoming economic data. Additionally, the Fed's decision to slow its balance sheet reduction by decreasing the monthly runoff of Treasury securities has influenced the 10-year Treasury yields. This change has resulted in minor fluctuations in the yields.
Despite the market correction, the U.S. economy demonstrated resilience. The Manufacturing PMI slightly missed the expansion threshold, indicating a nearly flat industrial sector. However, the unemployment rate decreased to 3.8%, underscoring the strength of the labor market. Inflationary pressures intensified, with the CPI rising to 3.5% year-over-year, while core inflation remained at 3.8%. Retail sales grew robustly at 4.3% year-over-year, suggesting strong consumer confidence and a thriving retail sector.
In a difficult month for the asset classes overall, U.K. equities outperformed their US and European counterparts. While the MSCI Europe ex-UK Index fell by 1.8% in April, while UK equities, supported by the high share of energy and commodity companies, delivered positive total returns of 1.5%.
From an economic perspective, the UK's economic performance was mixed, with CPI slightly decreasing to 3.2% year-over-year and core inflation at 4.2%. Despite economic uncertainties and ongoing Brexit-related trade issues, the UK's Manufacturing PMI edged closer to stability at 49.1. In the Eurozone, inflation moderated to 2.4% year-over-year, with core inflation at 2.7%. Monthly figures showed some volatility, possibly due to fluctuations in energy prices and ongoing supply chain challenges.
China’s economic indicators pointed to mild improvements. The Consumer Price Index (CPI) rose slightly by 0.1% year-over-year, while the Producer Price Index (PPI) fell further by 2.8%. The China PMI held steady at 50.4, indicating stable manufacturing activity amidst efforts to stimulate economic growth. The unemployment rate saw a slight increase to 5.2%.
Brent crude oil prices increased steadily from $81.7 per barrel in January to $87.9 in April, driven by supply constraints and robust demand, further influenced by geopolitical factors. Gold prices continued their ascent and reached a new high of $2,391 per ounce, reflecting increased investor demand for the precious metal as a hedge against uncertainty and a safe-haven asset during turbulent times.
As we look ahead to May 2024, the global markets will continue to be influenced by central bank activities and geopolitical developments. Investors are advised to adopt prudent investment strategies and diversify their portfolios to effectively manage risks and navigate the uncertainties associated with changing conditions.
Source: Bloomberg
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As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
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