Economic data showed that April was a positive month for the global economy, with growth remaining remarkably resilient in the face of rising interest rates. Falling energy prices have helped lower headline inflation in major developed economies, with the contribution of energy turning negative in the United States and the euro area.
US
Investors also received positive news on inflation. Energy reduced headline inflation in the United States, which was below expectations, by 0.5% to 5.0% year-on-year. The U.S. economy grew by a respectable 1.1% (annualized quarter-on-quarter) in Q1. Markets still expect U.S. interest rates to rise 25 basis points in May, but think the Federal Reserve could pause before cutting rates at the end of 2023.
Eurozone
Eurozone data were generally surprising on the upside in April, although manufacturing underperformed and the divergence between the manufacturing and services sectors widened further. This strength in services was also sufficient to maintain positive euro area GDP growth in the first quarter, with the economy growing 0.1% quarter-on-quarter. Headline inflation in the euro area fell sharply, thanks in particular to the energy sector. The consumer price index rose from 8.5% to 6.9% in April (year-on-year in March).
Crypto
Bitcoin increased its market dominance from 44.72% in March to 47.83% (+3.11%) in April, ending at $29,368. The price of ETH increased by +2.68%, while BTC increased by +2.71%. In April, the L1/L2 crypto market (native cryptocurrencies) showed consolidation, with a modest +1.49% increase in the total capitalization of the sector. However, the trading volume has decreased significantly by -18.64% over the same period, potentially indicating reduced interest in trading these Tokens. In April, the market for DeFi Tokens (cryptocurrencies issued by decentralized finance protocols) experienced a slight decline in its total capitalization, falling by -3.52%. In addition, the sector’s trading volume fell by -17.58%, with the majority of major assets also experiencing a price decline.
In conclusion, while the April data showed that economic activity remains resilient and that the risk of recession in the near term appears to have eased, we believe that the cumulative central bank tightening policies have not yet fully impacted the economies concerned. It is therefore necessary to maintain a diversified portfolio and maintain long-term allocations of high-quality assets in order to address the risks of recession in the medium term.