General Market Review
Global equity market dropped during the month of April with broad based weakness across most regions and sectors. Concerns over persistent inflation have led to a pushback of both the global bond and equity markets. On the other hand, the US economy has shown further resilience as both the services and manufacturing PMI (Purchasing Manager Indices) came in with a reading of 50.3 and 51.4 for the month of March. Moreover, the Euro area economy gave further signs of improvement. The Eurozone Flash-Composite PMI rose to 51.4 in the month of April.
Longer term interest rates have moved up again. The US 10-year treasury yield has increased from 4.2% to 4.7%, while the German 10-year Bund has climbed from 2.3% to 2.6%.
In the US, the consumer price index for the month of March came in at +3.4% vs. 3.2% (headline) and +3.7% (core) vs. 3.8% in the previous month.
US economic data was resilient. Non-farm payrolls and private payrolls increased by 303k and 232k for the month of March versus a previous reading of 275k and 223k. Durable goods orders increased by +2.6% during the month of March, whereas capital goods orders (ex-defense) have increased by +0.2%, respectively.
In Europe, inflation readings were nearly unchanged. The Euro-Area Consumer Price Index came in at 2.4% (headline) and 2.9% (core) for the month of March which was nearly unchanged vs. the prior month.
The MSCI World Index fell by -3.7% (USD den.) and the MSCI Europe Index came down by -0.9% (EUR den.).
Energy and Transportation
An increase in tensions between Iran and Israel has led to a sharp increase in oil prices to more than $ 90 per barrel of Brent oil until the middle of the month. Thereafter, the oil price fell back to the levels at the beginning of the month. Market participants have expected that diplomatic efforts would restore calm in the Middle East. Over the entire month of April, the price of Brent Oil has increased only slightly from $ 87.5 per barrel to $ 87.8.
Low crude oil inventories have left the oil market tight. Moreover, the International Energy Agency has projected demand to increase by a solid 1.2m barrels per day in 2024. The Stoxx 600 Oil and Gas Index (EURO denom.) was able to gain by +4.9 % in April.
On the other hand, the interest sensitive renewable energy sector was unable to decouple from the overall negative market trend. The S&P Global Clean Energy Sector Index fell by -5.0% in April. With that the renewable energy segment is now down by -15.0% year-to-date.
Transportation segments have shown a mixed performance. The DJ Transportation Average Index fell by -7.0% as trucking logistics companies in the US have warned that challenging conditions in the freight industry including weaker prices were eroding margins. Despite United Airlines upbeat outlook passenger demand outlook US airlines profits may continue to be pressured as fares are expected to weaken and labor costs rise. The US Global Jets Index dropped by -3.1%.
In contrast to the other transportation segments the Russell 2000 Marine Transportation Index has increased by +1.0%. In the dry bulk segment smaller vessel types have benefited from increased freight rates. Supramax rates have increased from $ 14k/day to $16k/day whereas capesize-rates have softened further from $20k/day to $17,5k/day at month end. Container freight rates have reversed its downward trend increasing by +12% in the month of April. The SCFI (Shanghai Containerized Freight Index) is still up by +94% year-on-year. Crude oil tanker (VLCC – Very Large Crude Carrier) rates have remained flat throughout the month averaging around 35k/day at month end, whereas product tanker rates (MR earnings) have softened from $38k/day to $ 31k/day. VLGC (Very Large Gas Carrier) rates have increased from $ 50k/day to $54k/day at month-end.
Fund Performance
The fund performance of both the USD as well as EUR denominated share classes were positive.
Within transportation the shipping long book had an overall positive contribution of 1.9%. Long positions in the dry bulk, crude/product/chemical as well as offshore-supply segment contributed a positive +1,0%, +0.8% and +0.1% respectively. The fund was particularly able to benefit from its long exposure in the smaller vessel segments of the dry-bulk sector (Supramax), On the other hand the short shipping book in the container and LPG segment had a negative contribution of -0.2%.
In the area of freight services, the short book had a positive contribution of +0.2% whereas short positions in other transportation segments had a positive contribution of +0.8%. The aviation long book was flat in the month.
Within the energy segment long positions in the oil & gas long book had a positive contribution of +0.3% whereas short positions in the segment had a negative contribution of -1.2%. A small long exposure in the renewable energy segment had a marginally negative contribution of less than -0.1%.
Overall hedging positions via short index futures have contributed positively by ca. +0.4% to the overall performance result.
For more information, you can find our latest Fact Sheet – April 2024.
Seahawk Investments GmbH
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Please note that the information from Lipper Leaders relates to the previous month. All rights reserved. Lipper Leaders – © 2024 Lipper Lipper Leaders Ranking Criteria – Ratings from 1 (low) to 5 (high) First Number = Total Return; Second Number = Consistent Return; Third Number = Preservation; Fourth Number = Expense