While the absolute monthly GBP total return figures in the above chart are useful, they fail to detail the levels of intra-month volatility we saw in many asset classes across April. For example - from 01 to 08 April global equities, as measured by the MSCI ACWI Index, had provided a negative GBP total return of over 10%. From 08 April to the end of the month the same index posted a positive GBP total return figure just short of 8%. While it is true that short-term fluctuations in prices tend to blend into a smoother picture when viewed over the longer-term, and looking through the noise is often important for long-term investors, this added context outlines how the journey to the net -2.4% figure was far from a straight line.
Among developed market equity indices, the US underperformed peers such as the UK and Europe. Areas with limited exposure to potential US tariffs performed well, with the latest round of company earnings and guidance showing demand remaining stable in areas such as European travel and UK retail. Smaller, more domestically focused companies in the UK also performed well, paring back some of the losses seen earlier in the year.
Japanese equities followed a similar path to other regions – initially falling sharply followed by a quick recovery, ultimately ending the month higher amid reports that the country’s leaders are engaging with the US in hopes of expediting a trade deal.
Performance was uneven in emerging market regions, with countries such as India, South Korea, Mexico, and Brazil proving resilient while the rapid ramping-up of reciprocal tariffs between the US and China negatively impacted Chinese equities. While the headline -6.3% monthly return of the Shanghai Shenzen CSI 300 index is eye-opening, losses could have been more severe were it not for Chinese “National Team” funds - entities which invest indirectly on behalf of the Chinese Government – who stepped in buy up local equities, limiting losses in an attempt to safeguard the smooth operation of the market.
US and UK government bonds were also highly changeable over the course of the month, but Gilt yields ultimately ended the month lower, resulting in the benchmark ICE BofA UK Gilts All Stocks Index ending the month 1.7% higher. At the time of writing, the Bank of England’s Monetary Policy Committee have just announced a 0.25% cut in the base rate of interest, bringing its level down to 4.25%. With the latest UK inflation reading showing a decline over March, and economic activity data remaining somewhat weak, this rate cut was widely anticipated, though the three-way split in the committee’s vote was a surprise, with two members calling for the rate to be held at the previous 4.5% level. Markets are still currently pricing-in further rate cuts later in the year, though a second-successive cut in June now appears less likely than it did before the latest meeting.
Turning to property, the FTSE EPRA NAREIT UK Index returned +4.8%, supported in part by income-seeking investors flowing back into higher-yielding assets in the wake of falling Gilt yields. The theme of increased corporate activity within the sector which has been notable since the start of the year also continued to play out during April, further helping support prices.
At -16.9% oil was by far the weakest performing major asset in April, posting its worst monthly return in almost three and a half years. The US administration’s tariff announcements exacerbated what was already an unfavourable supply, demand, and currency dynamic for the commodity. Headwinds included the pound continuing to strengthen against the dollar, the International Monetary Fund cutting its global growth expectations by 0.5%, and OPEC+ surprising markets by announcing their plans to further accelerate output over May with an additional hike also expected in June.
Gold was again a beneficiary of the month’s uncertainty, rising to a new all-time high on 22 April before pulling back slightly as the month ended. This wasn’t enough to support broad commodity indices however, as foreign exchange movements and the sluggish growth outlook also hampered industrial metal prices, further compounding underperformance on top of oil’s influence.
As we look forward towards the summer months, the focus of many market participants remains on 08 July – the date when President Trump’s 90-day additional tariff pause is currently set to run out. More aptly, the focus is on how many trade deals countries can agree with the US before that date. While initial frameworks may well be agreed over the coming months, in reality these types of agreements involve numerous country-specific nuances and can often take months, if not years of back-and-forth discussions to fully finalise. Trump’s approach to dealmaking has long been to take a hard initial stance in order to limit rollbacks for any inevitable compromises, and his current administration appears to be following suit.
Risks remain in this environment and uncertainty may remain elevated in the short-term, though we continue to believe that diversification helps to limit the effects of volatility, and this year could continue to present attractive longer-term opportunities for active asset managers.