After five consecutive months of upward momentum, equity markets declined in April. This result was influenced by several factors including interest rate uncertainty, sticky inflation, geopolitical tensions, and general investor angst.
Despite these challenges, a number of positive elements reinforce our optimistic outlook. For instance, the economy remains strong, underlying market technicals are favourable, and current investor sentiment appears overly pessimistic. Additionally, corporate earnings have continued to surprise to the upside, with over 75% of S&P 500 companies surpassing analyst expectations this quarter. Notably, ABC Funds heavyweights – Microsoft, Alphabet, Meta, and Amazon – all reported exceptional financial results in April. Artificial intelligence played a key role in their success, exemplifying its increasing importance as a driver of corporate growth. Adding to the positive news, Alphabet took an important step forward by announcing its first-ever dividend. Other ABC Funds standouts in April included: Carrier Global, Boston Scientific, and Trane Technologies.
As we enter the month of May, we are optimistic about the opportunities ahead. The current market negativity coupled with significant investor cash reserves, could set the stage for a major snapback rally into the summer with any unexpected positive catalysts.
Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.