As usual, publications of company results for the first quarter provided relevant information on economic activity in the early part of 2018.
We can start by looking at industrial activity, for which demand for chemical products is a good indicator. Here, BASF reported organic growth of 7% relative to Q1 2017, which was somewhat slower than last year’s figure of 8% on Q1 2016, but better than the 2016 increase of 3% on Q1 2015. This growth was considerably stronger in emerging economies (12%) than in mature economies (3.5%) and was driven more by prices (5%) than volumes (2%). BASF has confirmed its macroeconomic scenario for the year as a whole (global GDP growth of 3% with 3.2% growth for industry).
In the area of investment, Schneider Electric reported favourable conditions in residential, commercial and industrial construction and in industry and infrastructure, which translated into organic growth for the group of 6.2% (from 3% in Q1 2017), with growth of 5% in energy management and 9% in automation.
Figures from Nestlé paint a good picture of trends in consumer spending, with a 2.6% increase in volumes (1.6% in North America, 2.6% in Europe and 3.9% in emerging markets) and a 0.2% price/mix effect (-0.4% in mature economies and +0.8% in emerging economies).
Lastly, it is worth noting the growth in freight volumes handled by Kuehne & Nagel, which grew 5% in the first quarter in a market that expanded by 3% (compared to 4% in Q1 2017 and 1% in Q1 2016).
Against this background of growth settling down at a rate slightly slower than last year, equity markets in April proved to be more sensitive to geopolitical factors and considerations of interest rates and exchange rates than to the economic environment, with a marked divergence between US and European indices. In the USA, the rise in 10-year rates from 2.6% to 2.9% limited gains in the S&P 500 to 0.26%. In Europe, the limited rise in the Bund rate (0.56% at end-April, from 0.5% at end-March) and the weakening of the euro against the dollar allowed the Stoxx 600 index to gain 3.8% over the month.
The qualitative positioning of our funds, a source of security and performance over the long term, can cause temporary underperformance when markets are less discriminating. This was the case in April, when the Rouvier Valeurs and Rouvier Europe equity funds gained 1.7% and 2.2% respectively, underperforming their benchmarks. The high cost of hedging was unfavourable to Rouvier Évolution, which closed the month 0.2% lower. The cautious positioning of Rouvier Patrimoine, however, allowed it to gain 0.26% over the month whilst its bond market benchmark lost ground.