April delivered a sharp reversal in sentiment as global equities surged back to record highs, powered by renewed AI optimism and easing fears around central bank policy. But beneath the rally, rising oil prices, stubborn inflation pressures, and climbing bond yields are reminding investors that volatility remains firmly in play.
Global
- Global equities rose +6.4% in April (MSCI World) as risk-on sentiment returned as well as the rotation back into AI-related stocks.
- The Federal Reserve held interest rates steady at 3.5%–3.75%. Kevin Warsh soon to be confirmed as next chair and expected to be dovish.
- US equities rebounded +7% in April with both the S&P500 and NASDAQ hitting all time highs, led by strong US corporate earnings.
- In Europe, the ECB maintained policy rate and equities rallied +4.6% in April. Gains pared during the month as PMI indicates contraction.
- Japanese equities rebounded strongly in April (+5.7%), riding the risk-on wave, but the region is constrained by limited AI-exposure. BOJ held rates.
- EM equities gained +11.3%, driven by the AI semiconductor heavy Taiwan and South Korea. EM has now recovered all War-related losses.
Fixed Interest
- Global government bonds experienced a broad selloff as concerns around oil-driven inflation pressures forced a reassessment of global monetary policy.
- Rising yields are making markets increasingly aware of debt-heavy global government balance sheets, notably the US.
- UK yields advanced as Strait of Hormuz remained shut, adding to inflation pressures. Two hikes expected. 10yr Gilt yield closed at 5.03%.
- US Treasuries proved more resilient than UK Gilts. As a net energy exporter, higher prices impact the economy less. 10yr treasuries closed at 4.39%.
- Among corporates, high-yield bond spreads narrowed more than investment grades across the board. EM debt had the strongest fixed interest returns of +2.5%.
Other
- Gold fell (-4%), still up c. 8% year-to-date. Sell off is a mix of booking profits as well as higher bond yields increasing their relative attractiveness.
- Sterling was broadly stable against major currencies despite intra-month volatility. GBP/USD ended at $1.36. GBP/EUR ended at €1.14.
- Oil prices advanced +9%, following a 50% uplift in March, briefly exceeding $117 per barrel (Brent) due to Middle East supply disruption concerns.
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This article is for general information purposes only and does not constitute financial advice or a personal recommendation. Past performance is not a reliable indicator of future results. Investments can rise or fall in value, and you may receive less than you originally invested. Tax treatment depends on individual circumstances and may change in the future.
