One of the biggest data leaks in history took place at the start of April as German newspaper Süddeutsche Zeitung uncovered the ‘Panama Papers’, a collection of 11.5 million files from the database of offshore law firm Mossack Fonseca. The documents contain sensitive information on the offshore tax exploits of many well-known politicians, including twelve national leaders. The Prime Minister of Iceland, Sigmundur Davíđ Gunnlaugsson, stepped down amid widespread outrage over his family’s sheltered money offshore. In the UK, the leak prompted David Cameron to release a summary of his own tax records. At 2.6 terabytes, the leak is over 1,500 times larger than the WikiLeaks scandal in 2010.
Inflation in the UK is at its highest since the end of 2014. The latest figures from the Office for National Statistics show that inflation, measured by the Consumer Prices Index (CPI), rose to 0.5% in the year to March 2016, compared to 0.3% the month before. The main contributors to the increase were the rise in air fares and clothing prices. Meanwhile the preliminary estimates of economic growth, also from the ONS, indicate that UK GDP increased by 0.4% in the first quarter of 2016, compared to 0.6% in the final quarter of last year. Output in the dominant services sector increased by 0.6%, but production, construction and agriculture fell by -0.4%, -0.9% and -0.1% respectively.
UK retailer British Home Stores (BHS) has filed for administration, placing 11,000 jobs in danger. The department store had accumulated debt of over £1.3 billion, including a pension deficit of £571 million. Unless a buyer is found, then BHS, which was founded in 1928, could face the same fate as fellow high street chain Woolworths.
April was a mixed month for developed markets. The FTSE 100 index rose +1.42%, while the FTSE 250 (ex IT) index slipped -0.58 and the FTSE Small Cap (ex IT) indexes gained +0.92%. In the US, the S&P 500 index shifted +0.39%. European equities, measured by the Eurostoxx 50 index, climbed +1.48% and in Japan the Topix index declined -0.49% over the course of the month.
Emerging markets also experienced mixed fortunes. The MSCI EM (Emerging Markets) index posted a minor loss of -0.06%. Chinese equities, represented by the MSCI China index, dropped -0.19% while Indian equities, measured by the IISL Nifty index, grew +1.44%. Latin American equities had a positive month, as the MSCI EM Latin America GR index surged +4.26%.
Bond returns were also varied. In the UK market, the FTSE Gilts All Stocks index fell -1.20% with long dated (over 15 years to maturity) bonds losing -2.00%. In the corporate market, European corporate bonds, measured by the Markit iBoxx Euro Corporates index, returned +0.35% and sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, rose +0.70%. High yield returns were fairly strong, as the Bank of America Merrill Lynch Euro High Yield index and the Bank of America Merrill Lynch Sterling High Yield index posted gains of +1.98% and +1.38% respectively. Emerging Market sovereign debt, measured by the JP Morgan EMBI Global index, climbed +1.91%.
It was a very prosperous month for commodities, as the S&P GSCI index, which consists of a basket of commodities including oil, metals and agricultural items, hiked +10.14%. Brent blend oil, measured by the Oil Price Brent Crude PR index, performed particularly strongly as it rose +21.54%. The prices of gold and silver, measured by the S&P GSCI Gold and Silver indices, increased by +4.46% and +14.97% respectively. In the agricultural markets, wheat returned +1.61% and corn rose by +10.12%.
In the currency markets, the US dollar and the euro depreciated against the pound by -1.88% and -1.39% respectively. However the yen gained +3.07% against the pound.
James Timpson CFA, BSc (Hons), IMC
(All the above returns are reflected on a local currency basis i.e. they do not factor in any relevant currency movements. Unless accompanied by PR (Price Return), they do include income).
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