Market Reviews / Published on .

April 2022 - Constant change: inflation, rate hikes and instability


April 2022 - After a tumultuous first quarter, the central banks’ increasingly aggressive response to inflation failed to calm the global markets in April. The messaging by the Bank of Canada (BoC) and the U.S. Federal Reserve (Fed) continued to evolve. Once again, they said they expected to raise their rates further. They were not the only central banks to change their tone in response to more permanent inflation. For example, the Bank of Sweden also raised its key rate in April, even though it had stated in February that it would not do so until 2024. As central banks discourse hardened, the markets priced in further rate hikes, leading to a readjustment of valuations and high volatility for stocks and bonds alike.

Closing 30-04-2022 Variation vs 31-03-2022 Variation vs 31-12-2021
Interest rate in Canada (%)
Key rate 1.00 0.50 0.75
Commodities ($ US)
Oil (WTI) $104.69 3.4% 39.0%
Gold $1,911.40 -1.6%▼  5.8%
Currencies CAD Variation CAD Variation
EUR / CAD 0.74 2.6% 6.5%
JPY / CAD 101.52 4.3% 11.1%
USD / CAD 0.78 -2.3%▼  -0.9%▼ 

Sources: Bank of Canada, Fundata, US Energy Information Administration. 

At the same time, the war in Ukraine dragged on, and new international sanctions were contemplated, including an embargo on Russian oil by the European Union. Energy and commodity prices remained high, but even markets with high exposure to them had negative returns during the month. China’s lockdown measures continued, in line with the government's zero-Covid policy, intensifying the pressure on global supply chains.

Canadian Market -5.1%▼ (MSCI Canada 30-04-22)
The Canadian market’s solid first-quarter return relative to the global equity markets did not extend into April. The market suffered as a result of the harder tone taken by central banks and returned -5.1% in April, as measured by the MSCI Canada Index. Financials, information technology and industrials were the sectors that contributed the most to the negative return. The energy sector had a positive return.

As for bonds, new expectations of rate hikes weighed on the market once again, as the BoC increased its key rate from 0.50% to 1.0% at the start of the month. The FTSE Canada Universal Bond Index returned -3.5% on the month. On a positive note, the rate hike increased the current yield on bonds, such that at the end of the month the index had a current yield of 3.5% over one year.

American Market -7.0%▼ (MSCI USA 30-04-22 in CAD)
The U.S. market had its worst month since the onset of the pandemic in March 2020. The slight rebound in mid-March quickly faded as the market faced inflationary pressures, new announcements by the Fed and disappointing earnings from some major U.S. companies in the first quarter. The MSCI USA Index ended the month with a return of -9.1% in local currency. With the greenback appreciating against our currency, the index returned -7.0% in Canadian dollars. All sectors except consumer staples were down on the month, with communication services and consumer discretionary posting the largest losses.

European Market -3.4%▼  (MSCI Europe 30-04-22 in CAD)
Even though the European stock markets were less affected than the North American markets, they continued to suffer as a result of central banks discourse and the repercussion of the Russian-Ukrainian conflict. The MSCI Europe Index returned -0.6% in local currencies. Due especially to the appreciation of our currency against the euro, the return fell to -3.4% in Canadian dollars. Consumer staples, energy and utilities posted the best returns, while information technology and real estate declined the most.


Asian Market -4.2% (MSCI Asia-Pacific 30-04-22 in CAD)
In Asia, most sectors again ended in the red. Negative contributions by information technology, industrials and materials resulted in a return of -2.9% in local currencies, as measured by the benchmark MSCI AC Asia Pacific Index. Again, currency fluctuations affected the result, reducing the return to -4.2% in Canadian dollars. The best-performing sectors were utilities and energy.

Emerging Markets -3.4%▼ (MSCI Emerging Markets 30-04-22 in CAD)
In emerging markets, the Chinese government’s tight lockdown measures to contain Covid-19 infections led to high volatility and global supply-chain disruptions. The return was -3.5% in local currencies, as measured by the benchmark MSCI Emerging Markets Index. In Canadian dollars, the return was -3.4%. Oil producers, such as Saudi Arabia and Qatar, contributed positively, while Taiwan, Brazil and China were the main detractors.

Sources: Bank of Canada and MSCI Inc.

This review has been prepared for the general information of our clients and does not constitute an offer or solicitation to buy or sell any securities, products or services and should not be construed as specific investment advice. All opinions and estimates expressed in this document are as of the time of its publication and are subject to change. The information contained in this document has been obtained from sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. The content of this presentation is the exclusive property of Gestion FÉRIQUE and should not be further distributed without prior consent of Gestion FÉRIQUE. 

1 With FÉRIQUE Investment Services, principal distributor of the Fonds FÉRIQUE. See eligibility requirements at