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Global equities (+3.8%) advanced for the third consecutive month, ending April with a 10.0% gain year to date. Markets were fueled by a sharp increase in global economic growth, fiscal and monetary stimulus, strong corporate earnings, and accelerating vaccine rollouts. In April, the global total of COVID-19 vaccines administered so far surpassed the one billion mark, bolstering optimism that businesses in many countries can continue to reopen as lockdowns and restrictions are eased. Despite the significant progress in vaccine efforts, the case count worldwide reached new highs due to a devastating surge in India, an extremely large number of cases in Latin America, and a spike in infections across many countries in Asia. US GDP grew at an annualized rate of 6.4% in the first quarter, and China’s economy expanded by a record 18.3% in the first quarter compared to a year earlier, as the world’s two largest economies continued to rapidly recover from a deep coronavirus-induced trough in early 2020.
US equities (+5.3%) registered their best monthly performance since November 2020 amid a confluence of favorable themes, including a robust rebound in the economy, vaccination momentum, fiscal stimulus, and significantly better-than-expected corporate earnings. The prevailing bullish narrative overshadowed concerns about the risk of higher taxes, supply-chain disruptions, inflation pressures, and signs of lofty valuations and frothy sentiment in some areas of the market. States continued to ease or lift restrictions due to improving COVID-19 trends, with more than half the US adult population now having received at least one vaccine shot. President Joe Biden unveiled a US$1.8 trillion American Families Plan targeted at childcare, paid family leave, and education. Senate Republicans countered President Biden’s US$2.3 trillion infrastructure plan with a more modest US$568 billion package that is more narrowly focused on traditional infrastructure projects without accompanying tax increases. With 60% of US companies in the S&P 500 Index having reported first-quarter results, 86% of companies had registered a positive earnings surprise. By the end of April, the blended year-over-year earnings growth rate for the index in the first quarter was 45.8%, significantly higher than forecasts of a 24.5% increase. The forward 12-month price-to-earnings ratio stood at 22.0, above the five-and 10-year averages of 17.9 and 16.0, respectively…
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