Despite the Middle East crisis, equities (company shares) delivered a strong performance in April as ‘earnings season’, when companies provide an update on trading, got underway. However, bonds¹ provided weaker returns. US Treasuries and other government bonds declined, reflecting rising yields² and persistent inflation concerns. Commodities showed a mixed performance. Energy was the strongest segment, with WTI crude oil up 6.8%. Industrial metals also rose modestly. However, gold declined 2.9%, suggesting reduced demand for defensive assets. We invested across a range of asset classes, taking advantage of opportunities made more attractive by the sharp moves in markets witnessed in recent weeks.
We are now focused on inflation trends, interest rates, global economic growth momentum and the outlook for company earnings. All of these are likely to influence the performance of a range of investment assets in the coming months.
UK
The FTSE 100 rose 2.3% in April, as UK equities posted modest gains against a background of market turbulence caused primarily by the Middle East conflict and its impact on energy prices. UK Consumer Prices Index (CPI) inflation rose to 3.3% year-on-year in March from 3.0% in February, driven by rising energy costs. The Bank of England held interest rates at 3.75% after an 8-1 vote by the Monetary Policy Committee (MPC).
The lone dissenter favoured a hike to 4.0%. Several other MPC members indicated they could consider rate increases in the future. This underscores the fact that while the hurdle for rate hikes remains high, they are possible if the impact of the energy shock broadens out into the wider economy. Europe European equities delivered a strong month, with the MSCI Europe index (excluding the UK) gaining 4.5% as investors’ appetite for risk held up despite mounting geopolitical headwinds. The inflation picture, however, is becoming more complicated. The European Central Bank kept interest rates on hold for a third consecutive month, leaving its key benchmark rate at 2.0%. The accompanying statement struck a more cautious tone than previously, noting that the risks of inflation rising and economic growth slowing have increased. Investors are now expecting rates to rise by 0.5% by the end of the year
US
April was a strong month for US equities, with the S&P 500 up 7.2% and the technology-heavy Nasdaq index up 11.9%. Investors largely brushed aside concerns higher oil prices will drive up inflation. This view was helped by a US-Iran ceasefire announced on 7th April that eased energy prices. Employment figures came in slightly better than expected and first-quarter earnings season has seen exceptionally strong earnings-per-share³ (EPS) growth by companies in the S&P 500. At the time of writing, with more than 60% of companies having reported their figures, EPS growth is running at 27.1%. This is more than double the 13.1% estimated by analysts and is the highest growth rate since the final quarter of 2021.
The hyperscalers⁴ – Microsoft, Amazon, Alphabet Multi-Asset Management Team May 2026 Multi-Asset Solutions Investment Team Date 06/05/26 Capital is at risk. Please read full risk warning at the end of this document. 1 Bonds are interestpaying financial products issued by governments, companies and other institutions when they want to borrow money from investors. 2 Yield is the income paid by bonds or other investments. It is usually stated as a percentage of the value of the investment. 3Earnings per share is a company’s profit divided by the number of shares, indicating profitability per share. ⁴Hyperscalers earn their name from the massive scale of their cloud computing facilities and datacentres. Monthly Commentary Multi-Asset 2 OF 4 (Google’s parent company) and Facebook owner Meta – accounted for roughly 70% of this EPS growth. The US Federal Reserve (the Fed) held interest rates at 3.50-3.75%. Meanwhile, Kevin Warsh, US President Donald Trump’s nominee, took another step closer to replacing Jerome Powell as Chair of the Fed after he received the support of the Senate Banking Committee.
Japan
Japanese equities delivered strong gains during the month, with the MSCI Japan index rising 5.9%, outperforming most other developed markets. The rise was supported by a combination of improving risk appetite among global investors, a weaker yen and renewed investor focus on cyclical and domestically exposed sectors⁵. The Bank of Japan held interest rates at 0.75%, reinforcing expectations it will keep rates low even as other central banks consider raising them. This helped sustain flows from global investors into Japanese equities, particularly in areas such as the financial sector. Asia Pacific Asia-Pacific equities delivered a very strong month, with the MSCI AC Asia Pacific index (excluding Japan) rising 11.7%. Semiconductor and hardware stocks were a key driver of performance, as investor confidence in the global technology cycle continued to improve.
Strong earnings momentum and increased demand linked to artificial intelligence-related infrastructure supported share prices across Taiwan and South Korea, which were among the best-performing markets in the region. In Australia, gains were supported by a combination of resilient commodity prices, strength in mining stocks and improving sentiment towards domestic cyclicals. Financial services companies also contributed positively as expectations around interest rate cuts were pushed further out, supporting bank earnings outlooks.
Emerging Markets
The Emerging market equities delivered a strong month, with the MSCI Emerging Markets index rising 11.3%. Performance was driven by improving risk appetite among global investors and positive momentum in technology-related sectors, with an additional boost from stronger local currencies and a weaker US dollar. Latin American markets performed well overall, supported by Brazil and Mexico, where stable commodity prices and resilient domestic economic data helped underpin equity returns. Energy and raw materials companies were key contributors, benefiting from both supportive global demand and relatively disciplined domestic government policies. By contrast, China delivered more mixed performance. While parts of the stock market benefited from measures to inject money into the financial system and selective government policy support, broader sentiment remained cautious, particularly towards internet and consumer facing stocks.
Bonds
The Middle East conflict continued to dominate the attention of bond investors. There was a very brief rally in bond prices when a ceasefire was agreed, but when it was quickly abandoned yields rose and bond prices fell again. Diplomacy at times felt like it was being played out through social media headlines and investors soon felt a sense of fatigue. With higher commodity prices set to continue, and the potential for a near-term energy-driven inflation shock, investors have been focusing on interest rates. The consistent message from central bankers has been ‘wait and see’, although the tone seems to have shifted towards interest rates being likely to rise. Economic data has so far added little to the debate, being ignored either for being ‘pre-conflict’ or as just one data point in a rapidly changing picture.