Market Commentary

April 2026

Global share markets were broadly positive in April, however a surge in the value of the Australian dollar and a broad fall of the USD led to the MSCI World Index ‒ Net returning 4.96% in unhedged AUD terms. In hedged AUD terms the index returned 9.00%.

Global equities regained some stability in April though were still beset by headwinds and volatility due to the ongoing conflict in the Middle East. The United States outperformed during the period as strong earnings reports from large-cap tech firms boosted performance; two of the three major indices reached all-time records. April remained a transition month as a level of uncertainty permeated global markets. Strong economic reports out of the US helped support performance as did earnings resilience, outweighing macroeconomic concerns.

The US economy gained momentum in the first quarter, growing at a 2.0% annual rate compared to 0.5% the previous quarter. The figure is lower than economist forecasts and well below the 4.4% rate for the March quarter 2025. Inflation was sharply higher in the month; excluding energy and food costs, the Personal Consumer Expenditures Price Index – the US Federal Reserve’s preferred gauge for tracking inflation – climbed to an annual rate of 3.2% in March, matching economist estimates and reaching the highest level since November 2023.

Tech drove global growth in the month. Several Magnificent Seven companies – high-growth technology leaders including Alphabet, Apple, Meta, and Microsoft – reported strong earnings in late April. Microsoft saw cloud revenue grow by 40% and its Bing search ad revenue grew 12%; Alphabet reported a 19% revenue increase for Google Search. Interestingly, Google’s “Network” segment – AdSense, AdMob and Google Ad Manager – has been shrinking for two years with Google Network declining each quarter. IAB/PWC research finds that US programmatic advertising grew better than 20% in 2025, meaning there is a shift in preferred platforms and outlets.

Europe was negative through the period and was one of the weakest developed markets due in part to cyclical sectors including industrials and financials and rate-sensitive equities. While central banks held rates during the period, they moved away from expectations for easing as the Middle East conflict continued, inspiring persistent inflation concerns. The Economic Sentiment Indicator fell in April to its lowest level since November 2020, per the European Commission.

Asian and emerging markets were mixed in the month, with some regions recovering from soaring energy price hikes. Tech hubs like Singapore, Taiwan and South Korea were particularly resilient based on demand for AI-related hardware. Japanese shares jumped early in the month on ceasefire optimism and held a relatively stable value. The yen rose around 3% against the US dollar on the final day of the month – its biggest gain in three years – after Japan intervened in forex markets after hours, warning investors not to sell the currency.

Central bank activity

Interest rates were on hold in April through most markets as central banks weighed action to manage inflationary concerns arising from the conflict in the Middle East. Oil price and energy spikes have renewed inflationary concerns, shifting expectations away from potential easing to holding and increasing chances of rising rates in the near term if there is not a quick resolution to the conflict.

The US Federal Reserve (Fed) met at the end of April and held rates steady but with the highest level of dissent since 1992. The meeting – the last with Jerome Powell as chair – saw four of the 12 members of the Federal Open Market Committee dissenting. The Bank of England and European Central Bank also held rates steady. 

The Bank of Japan (BoJ) held its short-term policy rate at 0.75%, the highest level since 1995, citing risks from conflicts in the Middle East. The vote was 6-3 in favour of the hold; the three dissenting votes advocated for a rise to 1.0%.

The Reserve Bank of Australia (RBA) did not meet in the month however markets are pricing in an increase at its May meeting. The Reserve Bank of New Zealand (RBNZ) held rates steady at its April meeting, which was expected, however markets are pricing in three rate hikes before December. 

Australian activity

The Australian share market rebounded from the March sell-off, with the S&P/ASX 300 Accumulation Index closing the month up 2.25%.

Inflationary conditions renewed expectations that the Reserve Bank of Australia (RBA) would raise interest rates in the near term. The March Consumer Price Index (CPI) report showed headline annual inflation rising 1.1% from February to 4.6% and the trimmed mean was unchanged at 3.3%, which is well above the RBA’s 2-3% target range but below the expected 3.5%. Inflation is being driven in large part by oil price rises, which are the trimmed mean measure excludes as an outlier. Automotive fuel prices account for about 3.5% of CPI; fuel prices spiked as much as 32.8% in March and were around 10.7% higher than the previous peak of September 2023. While inflation hit a 3-year high in the March report, it was slightly lower than analysts had expected. March unemployment figures were relatively stable, with the unemployment rate remaining at 4.3% and 30,800 jobs added. The figures were the same when seasonally adjusted. 

General markets experienced volatility during the month on promises of a ceasefire and news that the Strait of Hormuz remained closed. Australia is particularly vulnerable to disruption as we import up to 90% of fuel; additional disruptions occurred due to a refinery fire in Geelong, one of the nation’s two remaining refineries (though early reports estimate that production and supply will return to normal before the end of May). 

Fixed income performance

Global bonds provided a modest return in April, with the Bloomberg Global Aggregate Index – $A Hedged returning 0.34%. Interest rates were on hold in April through most markets as central banks weighed action to manage inflationary concerns arising from the conflict in the Middle East. Oil price and energy spikes have renewed inflationary concerns, shifting expectations away from potential easing to holding and increasing chances of rising rates in the near term if there is not a quick resolution to the conflict.

The Australian bond market was flat in April, with the Bloomberg AusBond Composite 0+ Year Index ahead by 0.05%.

The RBA did not meet in April; there is broad expectation for a rate rise at its May meeting. While inflation is up significantly through March, it was slightly below estimates. Before the CPI figures were delivered, markets were pricing in an almost certain rate rise in May, though it has tempered slightly. Australia’s 10-year government bond yield rose above 5% during the month, though not exceeding levels seen in late March.  

The Australian dollar jumped sharply at the beginning of the month and continued to climb closing the month above US$0.72, the highest level since June 2022. The currency gained strength on expectations of an interest rate hike by the Reserve Bank of Australia, the third consecutive increase. The better than 4% growth of the value of the currency influenced the value of assets held in foreign currencies.