Monthly Market Review — April 2026

Equities

Global equities (+9.4%) rebounded in April, bringing year-to-date returns to 6.7%. Performance was led by technology and AI-linked companies, where strong earnings, continued investment in digital infrastructure, and investor positioning drove outperformance. The broader global backdrop showed increasing dispersion, driven by elevated geopolitical tensions, divergent regional growth trajectories, and accelerating inflationary dynamics. Central banks largely held interest rates steady, maintaining a cautious stance amid considerable uncertainty about the impacts of the energy supply shock on inflation and economic growth. Disruptions tied to the Iran conflict led to intermittent delays in Gulf shipping and frequent adjustments to insurance coverage. As a result, manufacturers worldwide are contending with volatile input costs and shifting delivery schedules, with the effects most pronounced across Europe and Asia. The IMF’s April World Economic Outlook described a fragile equilibrium; global economic growth remains intact but is slowing at the margin, while energy-driven inflation pressures increase the likelihood that monetary policy remains tighter for longer than markets currently anticipate. At the same time, investment in AI appears increasingly structural. Spending is focused not only on applications but on the build-out of core infrastructure — compute, data, and enterprise integration — suggesting a multiyear capital cycle as firms pursue productivity gains amid ongoing cost and labor constraints.

US
US equities (+10.5%) registered their largest monthly gain in over five years. Despite concerns about stalled diplomatic efforts to end the conflict in Iran, equities were lifted by favorable economic data, robust first-quarter earnings, and a historically large amount of stock purchases from systematic equity hedge funds. A surge in technology and AI-related equities led growth stocks to markedly outperform their value counterparts. GDP accelerated 2.0% annually in the first quarter, up sharply from 0.5% in the fourth quarter, on massive AI investment, resilient consumer spending, and a rebound in government spending following the government shutdown. As expected, the US Federal Reserve (Fed) left interest rates unchanged, although unusual divisions among policymakers reflected a high degree of uncertainty about the near-term economic and inflation outlook. Market pricing now suggests no interest-rate cuts in 2026. Skyrocketing gas prices drove the Personal Consumption Expenditures Price Index (PCE) up 0.7% in March (3.5% annually) — the largest monthly increase in nearly four years — while core PCE was unchanged at 3.2%. First-quarter earnings for the S&P 500 Index are on track to be the highest since late 2021, thanks to outsized earnings surprises from several “Magnificent 7” companies. According to FactSet, the percentage of S&P 500 companies with earnings and revenues that exceeded estimates is above the five- and ten-year averages.

Economic data released during the month suggested that the US economy is on a solid footing. After a decline of 133,000 jobs in February, nonfarm payrolls rebounded by 178,000 in March, significantly higher than the consensus forecast of 68,000. This lifted monthly average job growth to 68,000 in the first quarter, the highest in almost a year. The unemployment rate dipped to 4.3% in March, and continuing and initial jobless claims remained at a historically low level in April, with Fed Chair Jerome Powell citing increasing signs of stability in the labor market. Consumer spending remained healthy, with retail sales soaring 1.7% in March due to a record increase in spending on gasoline, larger-than-normal tax refunds, and resilient outlays among higher-income households. After adjusting for inflation, real personal spending rose 0.2%, slightly lower than February’s gain of 0.3% but still reflecting modest growth. The Conference Board’s Consumer Confidence Index edged up 0.6 points to 92.8 in April amid a ceasefire in the war with Iran and modestly improved views of the job market. The Iran conflict pushed up costs for home financing and building materials, adding to the ongoing affordability issues facing the depressed housing market.

The manufacturing sector expanded for a fourth straight month, as the Institute of Supply Management (ISM) Manufacturing Index was steady at a four-year high of 52.7 in April. However, the Strait of Hormuz closure upended global supply chains and drove input prices to their highest level in four years. The services sector expanded at a slower pace in March as the ISM Services Index slipped to 54 amid the largest decline in employment since 2023 and a sharp acceleration in input prices. Small-business sentiment in March dropped to its lowest level in nearly a year as higher energy costs fueled uncertainty, underscored by the lowest level of planned capital expenditures in the next three to six months since 2009.

Within the S&P 500 Index (+10.5%), nine of the 11 sectors posted positive results for the month. Communication services (+18.5%) was the best-performing sector, led by interactive media & services (+25.7%). Information technology (+17.5%) and consumer discretionary (+11.7%) also outperformed the index. Energy (-3.5%) was the worst-performing sector, while the health care (-0.5%) and utilities (+2.1%) sectors also lagged.

Europe
European equities (+4.9%) rose in April even as surging energy prices weighed heavily on European economies and caused eurozone business activity to deteriorate for the first time in 16 months. The S&P Global Flash Eurozone Composite Purchasing Managers’ Index (PMI) slipped to 48.6 — below the neutral 50.0 level — as German output decreased for the first time in 11 months and French business activity fell at the sharpest pace since February 2025. Monetary policy expectations swung sharply as macroeconomic data signaled a slower pace of economic growth and higher inflation. The European Central Bank (ECB) kept interest rates unchanged for the seventh consecutive time but warned that it may raise rates in June due to intensifying inflation risks from the energy supply shock. The Bank of England (BOE) also kept policy steady while setting out a range of potential economic impacts from the Iran conflict, the worst entailing a “forceful” hike in interest rates. Annual eurozone headline inflation jumped more than expected to 3.0% in April, from 2.6% in March, as soaring energy prices pushed inflation to its highest level since September 2023. Core inflation surprisingly eased to 2.2%. According to LSEG, first-quarter earnings for companies in the STOXX 600 Index are forecast to increase 6.9% from a year earlier.

The S&P Global Eurozone Manufacturing PMI grew to a 47-month high of 52.2 in April, as fears of supply shortages and rising prices led to stockpiling and a further expansion in new orders. Input prices accelerated to their highest level in almost four years, while output prices rose at their sharpest pace since January 2023. Logistical disruptions and reduced availability of raw materials continued to worsen suppliers’ delivery times. The S&P Global Flash Eurozone Composite PMI revealed that services sector activity decreased for the first time in nearly a year, and at the steepest pace since February 2021. Both input costs and output prices increased at a faster pace. The European Commission’s Economic Sentiment Indicator slid sharply to 93.0 in April; industry confidence remained broadly stable, while consumer confidence fell drastically.

Germany’s (+6.8%) first-quarter GDP grew at a faster-than-anticipated quarterly pace of 0.3% before the headline S&P Global German Manufacturing PMI slowed modestly to 51.4 in April, from a 46-month high of 52.2 in March, despite improved growth in output and new orders. However, the ZEW Indicator of Economic Sentiment plunged further to -17.2 in April, far below market expectations of -5 and the lowest level in more than three years, reflecting deepening pessimism about the country’s economic outlook amid ongoing conflict in the Middle East. The UK’s (+2.2%) economy expanded at a better-than-expected pace of 0.5% in February, driven by strong services sector growth. In April, the S&P Global Flash UK PMI Composite Output Index showed that business activity grew more than expected, due to the preemptive stockpiling triggered by the conflict in Iran. Annual headline inflation accelerated to 3.3% in March.

Pacific Basin
Pacific Basin equities (+5.8%) ended higher. In Japan (+7.5%), the Bank of Japan (BOJ) signaled it will continue to closely monitor the impacts of the Iran conflict, with BOJ Governor Kazuo Ueda warning of a cloudier economic outlook amid concerns that higher oil prices could lift inflation expectations and constrain economic growth. Economic data over the period was mixed. Real wages rose 1.9% year over year in February — the fastest pace since 2021 — supporting hopes that firmer income growth can sustain a favorable wage/price cycle. March exports beat expectations and continued to grow at a solid pace amid strong global demand; however, Japan’s trade surplus was well below estimates due to a faster-than-expected rise in imports, driven in part by rising energy prices. Industrial production in March fell 0.5% compared to the previous month, missing forecasts and underscoring mounting pressure on Japan’s manufacturing outlook. Core consumer prices advanced 1.8% year over year in March, accelerating for the first time in five months and indicating that price pressures were already building before the full impact of higher oil costs began to ripple through the economy. As projected, the BOJ left its benchmark rate unchanged at 0.75% in a rare split vote, and markets priced in a possible June interest-rate hike despite the government’s pro-stimulus stance and heightened economic uncertainty.

In Australia (+2.0%), resilient household spending, a tight labor market, rising fuel costs, and persistent inflation supported the case for further interest-rate hikes. Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser stated that inflation remains too high, which, along with limited supply capacity, heightens the risk of stagflation if the energy shock continues. Inflation expectations climbed to 5.9% in April, the highest since November 2022, reinforcing perceptions of persistent price pressures. Household spending rose 0.3% in February, pointing to resilient demand before the Iran conflict triggered a surge in oil prices and renewed cost-of-living pressures. Consumer sentiment dropped at the fastest pace since 2020 and business confidence deteriorated markedly, intensifying stagflation concerns, even as unemployment held steady and full-time employment continued to grow.

In Singapore (+1.9%), the Monetary Authority of Singapore (MAS) responded to rising inflation risks by tightening monetary policy and raising its 2026 headline and core inflation forecasts to 1.5% – 2.5%. First-quarter GDP contracted 0.3% quarter over quarter amid a sharp pullback in manufacturing, although annual GDP growth remained solid at 4.6%. Core and headline inflation in March accelerated at the fastest annual pace since the end of 2024. Against this backdrop, the government rolled out about S$1 billion in additional support to cushion households and businesses from rising inflation.

In Hong Kong (+3.7%), the Hong Kong Monetary Authority left interest rates unchanged at 4% but cautioned about greater policy uncertainty. Domestic economic conditions improved, with retail sales surging, unemployment edging lower, inflation staying subdued, and home prices continuing to rise. However, Hong Kong’s trade deficit in March was the widest on record, as imports surged more than 41% year over year on AI-related demand, war-induced stockpiling, and higher energy costs.

Emerging Markets

Emerging markets (EM) equities (+13.3%) surged in April. Asia led the gains, followed by Europe, the Middle East, and Africa (EMEA), while Latin America declined.

In Asia (+16.3%), China’s (+3.4%) economy gained momentum in the first quarter, as GDP accelerated 5.0% annually, from 4.5% in the fourth quarter. However, economic indicators suggest that activity broadly moderated in March, with the Iran conflict upending supply chains and weighing on global demand, while domestic demand remained weak. Export growth slumped to 2.5% year over year, down sharply from 21.8% in the January – February period. Industrial output, fixed-asset investment, and retail sales also slowed. China’s official manufacturing PMI edged down slightly to 50.3 in April but remained in expansionary territory, with manufacturers ramping up production and shipments amid fears that a prolonged conflict in the Middle East could further increase costs. The property sector remained under pressure; new-home prices continued to fall in March, with a 3.4% annual drop marking the sharpest decline in 10 months. Chinese authorities capped domestic fuel price increases to cushion households and businesses from energy-driven inflation. Taiwan’s (+25.1%) exports surged to a record high in March, rising 61.8% from a year earlier to US$80.2 billion, thanks to robust demand for AI applications and technology products. GDP expanded 13.7% year over year in the first quarter, the fastest pace since 1987 and up from 12.7% in the prior quarter. In South Korea (+33.9%), exports in April rose for the 11th straight month with a sizable 48.0% gain compared to a year earlier. Factory activity expanded at the fastest pace in over four years, buoyed by semiconductor and computer-related demand. In India (+9.2%), the HSBC India Manufacturing PMI rose slightly to 55.9 in April, firmly in expansionary territory but still near a four-year low. The HSBC India Services PMI climbed to 57.9, pointing to a solid expansion in the services sector.

In EMEA (+2.8%), Saudi Arabia’s (-0.6%) GDP growth fell to 2.8% year over year in the first quarter based on preliminary data, down from a 5.0% expansion in the previous quarter, reflecting damage to critical oil infrastructure and production facilities as well as a severe disruption to oil exports due to the blockade in the Strait of Hormuz. OPEC’s control over global oil supplies was undermined after the United Arab Emirates (+6.7%) announced that it will leave OPEC on May 1 because of increasing frustrations with its allotted quota for oil production.

In Latin America (-0.4%), Brazil’s (-0.1%) central bank sought to balance a steep rise in inflation and sluggish economic growth, cutting interest rates by 25 basis points (bps) for the second straight month, to 14.5%. The IPCA-15 index of inflation surged to 4.37% annually in the first half of April, although the increase was less than expected. Mexico’s (-0.4%) economy contracted 0.8% in the first quarter compared to the previous three-month period, worse than expectations for a 0.5% decline. The decline was broad-based across all three key areas of the economy. Inflation eased less than expected to 4.53% in the first half of April but still gives the central bank scope to lower interest rates.

Fixed Income

Renewed inflation concerns and higher energy prices triggered a reassessment of policy outlooks, driving global sovereign yields modestly higher. Fixed income sectors posted positive excess returns as credit spreads tightened despite ongoing geopolitical uncertainty. The Fed and most other major central banks kept policy rates unchanged amid elevated inflation uncertainty. According to Bloomberg, the US Aggregate Index returned 0.11% for the month and the Global Aggregate Index returned 0.30% in USD-hedged terms, outperforming duration-equivalent government bonds.

Global sovereign yields closed modestly higher, as rising energy prices revived concerns over inflationary pressures. Markets moved quickly to reassess the monetary policy outlook, repricing the risk of additional tightening. In the US, Treasury yields edged higher after the Fed left policy rates unchanged and reiterated its commitment to containing inflation. However, a more balanced growth outlook and the US’s position as a net energy exporter helped limit the rise in yields. In the euro area, performance was mixed, with yields initially increasing before a late-month rally followed the ECB’s decision to hold policy steady. German bunds were broadly flat, while higher-yielding peripheral markets, particularly Italy, outperformed on continued spread compression. UK gilt yields also moved higher amid persistent inflation pressures and policy uncertainty. In Asia Pacific, Japanese government bonds underperformed as a more hawkish tone from the BOJ and upward revisions to inflation forecasts pushed 10-year yields to their highest levels since 1997. In contrast, EM sovereign yields ended mostly lower, as elevated real yields and policy credibility allowed income and modest yield compression to offset global duration headwinds.

US investment-grade corporate bonds delivered positive total returns and outperformed duration-equivalent Treasuries. Financials, industrials, and utilities led performance relative to comparable government bonds. High-yield bonds also posted positive total returns, with lower-rated securities outperforming higher-quality peers. CCC rated bonds generated the strongest returns, followed by B and BB rated bonds. By sector, telecommunications, media, and cable & satellite were the top performers during the month, while transportation, paper, and environmental services lagged. Global credit outperformed duration-equivalent government bonds as spreads tightened. At the broad sector level, the financials, industrials, and utilities sectors outperformed relative to duration-equivalent government bonds. US dollar-, euro-, and sterling-denominated corporate bonds generated positive total returns, with all currencies outperforming duration-equivalent government bonds. Within EM, local market debt underperformed external debt. Spreads narrowed, and an increase in US Treasury yields hurt external debt performance. EM currencies appreciated and EM rates rose, weighing on local markets’ results. Within securitized sectors, agency mortgage-backed, commercial mortgage-backed, and asset-backed securities outperformed duration-equivalent government bonds.

Currencies

The US dollar softened in April despite elevated geopolitical uncertainty. In the G10, performance was led by higher-beta and commodity-linked currencies, with the Australian dollar and the Norwegian krone outperforming alongside a stronger British pound. The euro and Japanese yen posted modest gains despite ongoing economic and policy uncertainty, with the yen strengthening late in the month amid heightened intervention risk and support from Japanese authorities. EM currencies were more mixed but generally resilient. Latin America was a clear outperformer, led by the Brazilian real alongside solid gains in the Mexican peso and Chilean peso. These currencies were supported by elevated real yields, favorable commodity dynamics, and credible monetary policy frameworks. Asian currencies were mixed, reflecting differentiation in external balances and sensitivity to higher energy prices.

Commodities

Commodities (+6.4%) rose in April, marking a fourth consecutive monthly gain. Energy led, industrial metals and agriculture & livestock contributed, and precious metals declined.

Energy (+10.2%) continued to rally, driven by sharp advances across crude oil and refined products amid severe supply disruptions and elevated geopolitical risks. Gasoline (+16.1%), crude oil (+11.7%), gas oil (+9.1%), and heating oil (+4.9%) continued to trend higher due to constrained flows through the Strait of Hormuz and a record pace of inventory drawdowns, tightening global balances. Additionally, refining margins were driven up by heightened demand ahead of the summer driving season, as refiners sought to secure adequate feedstock supplies. In contrast, natural gas (-9.0%) declined as mild spring weather weighed on domestic demand and storage injections accelerated, offsetting support from robust liquified natural gas exports.

Industrial metals (+4.1%) gained. Nickel (+13.8%) surged as Indonesia tightened mining quotas and revised ore pricing, which lifted global production costs just as sulfur shortages constrained battery-grade supply. Improved Chinese stainless steel demand and a weaker US dollar also supported prices. Copper (+5.5%) remained elevated as severe concentrate shortages and negative treatment and refining charges highlighted tight mine supply, forcing smelters to cap output. Operational disruptions at major mines, rising sulfuric acid risks, and resilient Chinese demand alongside a weaker US dollar further supported prices. Zinc (+4.2%) and lead (+3.2%) advanced on steady galvanizing demand and limited mine growth. Aluminum (+0.7%) increased, with ample inventories and stable smelting output tempering prices despite strong downstream consumption.

Precious metals (-0.8%) declined modestly as higher real yields and a firmer US dollar reduced safe haven demand. Silver (-1.6%) slipped as rising treasury yields pressured investment flows despite solid underlying industrial demand. Gold (-0.8%) moved lower amid moderating near-term geopolitical risks and reduced expectations for monetary easing, which increased the opportunity cost of holding nonyielding assets.

Agriculture & livestock (+1.9%) posted modest gains. Despite ample global supplies, cotton (+14.6%) rallied on improved demand expectations in China and India. Cocoa (+5.8%) was driven higher by renewed concerns about West African supplies in the face of irregular rainfall, fertilizer shortages, and growing risks to mid-crop yields in Côte d’Ivoire and Ghana. Live cattle (+4.7%) ended higher on tight herd supplies and strong seasonal demand, while lean hogs (-2.4%) were pressured by higher hog slaughter and rising pork supplies. Coffee (-2.5%) ended lower as markets increasingly priced in a record Brazilian harvest in 2026/2027 and a larger global surplus. Sugar (-6.9%) fell given expectations of a global supply surplus, driven largely by a production recovery in India as well as record Brazilian production estimates.