It was very much a risk-on month for equities and especially for the UK. There was a generally more positive backdrop for equities, which was due to multifarious factors including reduced political risk (Korea), more attractive valuations and dovish statements from central banks.
The chaos surrounding sterling, the Brexit process and May’s beleaguered government in the UK continued during April, but this has thrown up lots of opportunities for the active manager over the medium term.
As for the rest of the world, political risk has dissipated with the potential denuclearisation of North Korea, which if achieved, will be undoubtedly a good thing.
Base Rate unchanged
The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 9 May 2018, the MPC voted by a majority of 7-2 to maintain Bank Rate at 0.5%. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion. The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.