Investment Commentary - April 2026

April proved to be another highly eventful month for financial markets, as investors continued to navigate the evolving conflict between the US and Iran alongside a sharp resurgence in enthusiasm surrounding artificial intelligence (AI)-related equities. In fact, April demonstrated the market’s ability to look through significant geopolitical and macroeconomic uncertainty when supported by strong earnings growth and powerful structural investment themes. Despite persistent tensions in the Middle East, elevated oil prices and growing inflation concerns, global equities delivered one of the strongest monthly rallies in recent years, led overwhelmingly by AI-related technology stocks and emerging market semiconductor supply chains.

Despite this challenging geopolitical backdrop, global equities delivered a powerful “risk-on” rally. Investors rotated decisively back into AI-related growth stocks, driving the S&P 500 and Nasdaq to fresh all-time highs. The Philadelphia Semiconductor Index surged +38.4% during the month, marking its strongest monthly gain since February 2000, while the MSCI Emerging Markets Index rose +14.7%, its best monthly performance since November 2022. Taiwan and South Korea, key beneficiaries of the global AI supply chain, posted particularly strong gains.

The US market was the standout performer among developed economies. The S&P 500 returned +10.5% over the month, delivering its strongest monthly gain since November 2020. The Nasdaq rose +15.3%, while semiconductor stocks were especially strong, with the Philadelphia Semiconductor Index gaining +38.4%. Investor sentiment was boosted by a very strong corporate earnings season, particularly among large-cap technology companies and hyperscalers investing heavily in AI infrastructure.

Emerging market equities also delivered exceptional returns. The MSCI Emerging Markets Index rose +14.7%, fully recovering the losses experienced during the geopolitical turmoil of February and March. The rebound was concentrated heavily within Asia, where Taiwan and South Korea benefited from renewed demand for semiconductor and AI supply chain exposure. MSCI Asia ex-Japan rose +16.3% during the month.

Japanese equities also participated strongly in the rally. The Nikkei gained +16.1% during April, leaving the index up +18.7% year-to-date despite the volatility experienced earlier in the quarter. Japanese markets continued to benefit from supportive domestic policy expectations and strong global technology demand, although rising bond yields and higher imported energy costs remained potential headwinds.

European equities also recovered, although gains were more modest relative to the US and Asia. The STOXX 600 rose +5.6%, while Italy’s FTSE MIB gained +9.6% and Germany’s DAX rose +7.1%. However, concerns surrounding weaker eurozone business activity and ongoing energy supply disruption continued to weigh on the region’s broader growth outlook.

The UK lagged other developed markets. The FTSE 100 rose +2.3% during April, leaving it up +5.8% year-to-date. The market’s defensive and commodity-heavy composition proved less well positioned for a month dominated by growth and technology leadership. Rising UK inflation also increased expectations for further Bank of England tightening, limiting upside for domestic equities.

Bond markets experienced another challenging month as inflation concerns remained elevated and investors increasingly priced out expectations for central bank rate cuts.

Government bond yields rose sharply in several major economies. In Japan, 10-year government bond yields moved above 2.5% for the first time since 1997 as markets responded to a more hawkish tone from the Bank of Japan alongside rising imported energy costs. Japanese government bonds declined -0.7% during the month.

UK gilts also struggled, falling -0.5% in April and leaving the asset class down -2.6% year-to-date. The combination of elevated energy prices, persistent domestic inflation and concerns regarding fiscal sustainability led investors to price in additional Bank of England tightening during the remainder of the year. UK 10-year gilt yields reached their highest level since 2008.

European government bonds delivered mixed returns. German bunds were broadly flat over the month, although yields rose to post-2011 highs during periods of heightened inflation concern. Peripheral European markets proved somewhat more resilient, with Italian BTPs returning +0.6% as spread compression helped offset broader rate pressures.

US Treasuries proved comparatively resilient relative to many international peers. The Bloomberg US Treasury Index declined only -0.1% during April, leaving returns broadly flat year-to-date. While inflation expectations increased, the US economy’s position as a net energy exporter helped cushion some of the economic risks associated with higher oil prices.

Credit markets benefited from the broader improvement in risk appetite. Both investment grade and high yield spreads tightened modestly during the month as investors rotated back into risk assets. US high yield bonds returned +1.6%, while European high yield delivered +1.8%.

Commodity markets remained heavily influenced by developments in the Middle East throughout April. Brent crude oil experienced significant volatility as investors reacted to evolving geopolitical developments and ceasefire negotiations. Although prices briefly fell below $91 per barrel mid-month following optimistic diplomatic headlines, renewed concerns surrounding supply disruption pushed Brent back above $110 by month-end.

Despite finishing April down -3.7% for the month following the enormous gains recorded in March, Brent crude remained up +87% year-to-date. WTI crude gained a further +3.6% during April, leaving it up +83% year-to-date.

Industrial metals also strengthened, supported by both AI-related infrastructure demand and improving global risk sentiment. Copper rose 5.6% during the month.

Precious metals weakened modestly following their strong first quarter performance. Gold declined -1.1% during April, while silver fell -1.9%, as investors rotated back toward higher-risk assets.

Currency markets reflected improving investor sentiment and reduced demand for traditional safe havens. The US dollar weakened broadly, with the DXY Index declining -1.9%, its largest monthly fall since August. Sterling strengthened +2.9% against the dollar, while the euro gained +1.5%.