World markets defy expectations in month of surprises

World financial markets are in a new period of uncertainty after a month in which most expectations were upended.

Stocks fell sharply, the US dollar slumped against a resurgent euro and oil prices rose, reversing many of the first quarter’s most profitable trades.

A slowdown in US growth, a brightening outlook for Europe, pockets of resilience in Chinese demand and rapid cutbacks by US shale-oil producers were just some of the surprise factors in April.

The accumulation of negative economic data dimmed the outlook for the US economy, prompting many investors to push back their expectations for when the US Federal Reserve will raise interest rates.

The outlook for the world economy also dimmed as Greek troubles returned as a disruptive force and flare-ups in the Middle East made it harder to predict where markets were headed.

Currencies: Euro continues to climb
The euro strengthened 4.5% against the dollar in April after tumbling 11% in the first quarter. By the end of last week it had climbed to as high as $US1.1292, its strongest level since late February and up 2.9% higher for the week, well above the 12-year low of under $US1.05 hit in March.

Stocks: Rebound fails to recover losses
US stocks ended the week in the red, in large part due to Thursday’s sharp selloff. The companies whose shares fell the most were those that had previously performed well, such as biotechnology and small-capitalisation companies.

The Nasdaq Biotechnology Index fell 2.8% in April after jumping 13% in the first quarter.

On Friday, the Dow Jones Industrial Average added 183.54 points, or 1%, to 18,024.06. The S&P 500 index gained 22.78 points, or 1.1%, to 2108.29 and the Nasdaq Composite Index climbed 63.97 points, or 1.3%, to 5005.39.

In the UK, the only major European market open on May Day, the FTSE 100 index rose 0.4%.

Oil retreats from year’s high
Oil prices retreated from 2015 highs at the end of last week. The US benchmark has risen 25% after declining 11% in the first three months of the year.

The surge in recent weeks after falling to six-year lows in March came after traders bet the global glut of crude would soon shrink due to stronger demand and reduced spending on new production. But some analysts caution that the rally was overdone, as the market remains oversupplied.

Light, sweet crude for June delivery ended on Friday at $US59.15 a barrel in New York, a 3.5% rise on the week. Brent crude, the global benchmark, was at $US66.46 a barrel after gaining 1.8% on the week.

Gold continues to retreat
Gold prices fell last week to their lowest level in six weeks, as traders readjusted their expectations on how soon interest rates will start rising.

Gold for the most actively traded June contract lost $US7.90, or 0.7%, to settle at $US1174.50 an ounce in New York on Friday. Gold has lost more than 9% since late January as sentiment favoured a stronger economic outlook.