Monthly Markets Outlook: April Special

March has been a fairly volatile month for most asset classes, and inflation fears have been the main market driver. Equity markets managed to bounce back from a sell-off and some indices even reached a new record high - such as the Germany 30. Oil saw a heavy sell-off amid crowded positioning, and a strong Dollar has been driving the price of precious metals lower.

The start to the new trading month is likely to be subdued as many major markets will be closed on April 2nd and 5th due to public holidays. However, the rollercoaster ride is far from over yet, and in this article, we will be looking at the major themes that traders will focus on over the next four weeks.

Inflation spooking markets

Central banks around the globe have tried to calm markets down and reassure them that inflation is not something to be concerned about right now. While the Fed´s comments did help to stabilize markets, concerns about rising inflation are far from gone. The U.S. economy remains on a steady recovery path, and economic data in April is likely to signal that it is picking up momentum – starting from an NFP figure on Friday that is set to beat expectations. The recent stimulus package has been another major boost for the world´s biggest economy, and investors are keen to hear more about President Biden´s economic plan. Rising growth expectations could push yields higher, and markets would start to doubt even more that the Fed will keep rates low until 2023. Investors hate uncertainty, and an early rate hike could do serious damage to the stock market rally.

Europe's slow vaccination campaign

European equity markets have been performing relatively well considering the sharp increase in new COVID-19 cases and the prospect of prolonged lockdowns. Investors have already accepted that the current restrictions could be extended for quite some time and potentially even into the summer. The EU´s vaccination campaign had a sluggish start and frustration is starting to mount. However, market participants are optimistic that vaccinations will pick up soon, and with the general progress that has been made in the fight against COVID-19, investors are starting to see a light at the end of the tunnel, even if it is not a very bright one at the moment. However, in April markets could start to increasingly focus on the EU recovery fund, which is still facing various hurdles.

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Disclaimer: The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; ...

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