Equity markets staged a strong recovery in April, continuing the rally that started in late March. Why? Probably a combination of three reasons. First, the speed and extent of fiscal and monetary intervention by the authorities. Second, the speed of the drop in equity markets during February and March had left sentiment at historically low levels. Third, there were tentative signs that new infections (and deaths) from Covid-19 had peaked. Whether this is just a 'bear market' rally or the start of a new bull market remains to be seen; more on that later.
The recovery, as so often is the case, was led by the US, specifically technology/internet stocks. In the Nasdaq 100, Tesla (US:TSLA) topped the charts, gaining 49.2 per cent, but the big beasts were also very strong; Microsoft (US:MSFT) was up 13.6 per cent, Apple (US:AAPL) rose 15.5 per cent, Amazon (US:AMZN) was up 26.9 per cent, Facebook (US:FB) up 22.7 per cent, Alphabet (US:GOOGL) up 16.0 per cent and Netflix (US:NFLX) rose 11.8 per cent. Crises tend to accelerate trends that are already in motion.
The Nasdaq Composite was up 15.5 per cent and the S&P 500 12.7 per cent. Continental European markets made smaller gains, with the Dax up 9.3 per cent, the CAC up 4.0 per cent and the MIB, just 2.0 per cent. In the Far East, the Nikkei 225 was up 6.8 per cent, China A All Share 5.2 per cent and the Hang Seng 4.4 per cent. In the UK it was mainly about small- and mid-cap stocks. The FTSE All-Share (Total Return) Index gained 4.9 per cent, but within that, the FTSE 100 was only up 4.0 per cent. The FTSE 250 Mid Cap Index was up 8.9 per cent and the FTSE Small Cap +9.8 per cent. The Aim market did even better than the Nasdaq, gaining 18.8 per cent.