A recession in America still appears unlikely despite a dip in employment figures and fears of further interest rate rises. Elsewhere, Japanese and European equity markets saw heavy losses.Global equity markets saw significant losses in April. Signs of an American slowdown were reinforced when March employment figures showed 110,000 new hires compared with 243,000 the previous month. Inflation rose by 0.6% in March, taking the annual rate to 3.1% and reinforcing fears of further interest rate increases at the next meeting of the Federal Reserve. The IMA North American and North American Smaller Companies sectors fell 3.11% and 3.15% respectively. In other markets, Japanese equities posted their worst month since 2003 as the Nikkei 225 fell 5.66%. However, the yen appreciated by 1.6% against sterling. The IMA Japanese sector fell 2.11%, while the Japanese Smaller Companies category posted the poorest performance, falling by 4.12%. European equity markets also suffered from heavy losses as the German Dax 30 and French Cac 40 both fell by close to 4%, although British equities fared better, with the FTSE 100 losing only 0.98% and the FTSE All-Share falling by 0.73% for the month. The-top performing IMA category was European Smaller Companies, which gained 2.95%. It was unsurprising to see Global Growth funds posting an average fall of 0.11% for April. The best-performing fund in the IMA sector was once again M&G International Growth, which gained 2%, closely followed by Standard International Trust, gaining 1.9%. Both funds benefited from benchmark overexposure to Continental Europe. On average, Global Growth funds reduced their geographical allocation to Britain by 1.2%, while emerging market exposure was reduced by an average of 0.9%. The regions that increased their exposures were Europe and Asia ex Japan, which rose by 1.2% and 1% respectively. Of the funds that saw large movements in geographical allocations, First State Global Opportunities reduced allocations by 6% in North America and 5.4% in Japan, while income/cash exposure by 4.2%. Fund managers are wondering if we are entering a period of bear market returns for American equities. However, corporate earnings in both America and Europe have been above expectations in the first quarter of 2006, and although the economic slowdown cannot be denied, mixed macroeconomic data still suggests a recession in America is unlikely, so we do not see long-term falls in American equities. The average cash exposure for the sector at the end of April was 2.2%.