Financial Markets: April Review

Financial markets again benefited from a global recovery and unrestricted support from central banks. Fears of rising inflation were quickly allayed by central banks, despite all signs of strong general price increases ahead.

Indeed, the explosion in commodity prices continued throughout April, for example, for copper, corn or wood futures contracts, which increased 6 times over the year.

In addition, improved employment, higher wages, shortages in certain sectors, as noted by auto companies in particular, or massive liquidity injections orchestrated by central banks, did not force the latter to change their rhetoric. about the potential explosion of inflation.

Financial markets were also boosted by the results of companies, in particular the largest US companies in the S & P500, such as GAFAM. They published fast-accelerating results with strong growth prospects driven by the economic recovery from the pandemic. The latest growth projections from the IMF show the strongest acceleration in GDP growth in nearly 40 years in the United States and significant increases in all regions of the world.

Cryptocurrencies have also benefited from the craze and excess liquidity. Bitcoin came to test a new all-time high near $ 65,000. However, the price of the main cryptocurrency peaked on the day Coinbase was introduced, which hasn’t proven very profitable so far.

As for the pandemic, vaccination campaigns are accelerating in the United States and other regions of the world, but lagging behind in Europe. In addition, at the end of April, the situation in India was spiraling out of control, with the number of new cases exceeding 200,000 per day.

The United States or France, the United Kingdom and Germany have started sending equipment to slow the epidemic, but the lack of oxygen and hospital beds could lead to a health disaster, slower global growth and put pressure on the oil market in the short term. as India remains the third largest importer of black gold in the world.

Finally, economic statistics around the world have shown that the recovery is well under way, and this could pose risks to financial markets as this recovery suggests that central bank support should start to decline. The rise in bond rates may resume by the summer amid the “normalization” of global monetary policy, although Jerome Powell and his international colleagues are trying to buy time to prevent a serious correction in world stock markets in the event of adverse events. reduction of this market aid.

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