Insights

After a difficult March, April brought some welcome relief for investors. Share markets globally bounced back, the ASX200 finished the month up, and international shares had a strong run. On the surface, it looked like things were normalising.

But beneath the recovery, the same pressures that drove the volatility in the first place haven't gone away. If anything, they're becoming more entrenched.

What actually drove the rebound

The lift in markets during April was largely driven by optimism that tensions in the Middle East might ease. Investors had sold down heavily in March, and when the mood shifted - even slightly - there was a meaningful bounce, particularly in technology and resources stocks.

Locally, the ASX200 gained 2.18% for the month. Internationally, the MSCI World Index was up 9.45%. Emerging markets also had a strong run, up 9.28% for the month and an impressive 30.55% over the past year.

The standout performers on the Australian market were in technology and property trusts, with NEXTDC leading the charge on the back of continued enthusiasm around AI infrastructure investment. Materials stocks also recovered as commodity prices stabilised after the March energy shock.

The laggards were in healthcare. Cochlear had a particularly difficult month, falling sharply after disappointing results, and dragged the broader healthcare sector down with it.

The thing that hasn't been resolved

The Strait of Hormuz blockade - the closure of one of the world's most critical shipping channels for oil - remains firmly in place, and peace talks between the US and Iran have stalled. Every day the blockade continues, global oil supply shrinks further. The world has already lost around 5% of its annual oil supply, and the buffer from existing stockpiles is running down.

This matters for a few reasons. Energy prices feed into almost everything - inflation, business costs, consumer spending, interest rates. And when energy prices stay elevated for an extended period, central banks face an uncomfortable choice between containing inflation and supporting growth.

In Australia, the RBA has already raised rates by 0.75% this year in response to inflation that was running hot even before the Middle East conflict escalated. Analysts are anticipating further increases, though the slowing domestic economy complicates that picture. Business conditions have declined for four consecutive months. Consumer sentiment fell sharply in April - the largest monthly drop since the pandemic. Forward orders are falling, and business capital spending outside of technology has been contracting for some time.

It's a difficult mix: rising prices alongside softening growth. Neither condition is particularly easy to navigate in isolation, and managing both simultaneously is genuinely hard.

What's happening in the US and globally

The US economy is still growing, but the growth is increasingly concentrated in a handful of areas - high-income consumer spending, AI-related investment, and net trade. Elsewhere, business investment outside of technology has contracted for six consecutive quarters, household disposable income is flat, and consumer confidence is near all-time lows.

Inflation in the US came in higher than expected in April, with headline CPI rising to 3.8%. Energy is leading the increase, and there are early signs that it could start filtering through more broadly. The incoming Federal Reserve chair, Kevin Warsh, is expected to bring a different communication style to the role - less reliance on forward guidance and dot plots. Markets will need to adjust to that shift, and the transition period is unlikely to be smooth.

China, meanwhile, posted 5% GDP growth in the first quarter - at the high end of its target range. That's a reasonably solid result, though much of the momentum came from exports and fiscal spending rather than domestic consumption, which remains subdued.

What the longer-term numbers show

One thing worth keeping in mind when markets are noisy is the longer view. The asset class return table for the period to 30 April 2026 is a useful reminder of what patient investors have historically experienced.

Australian shares have returned 9.31% annually over ten years. International shares 13.41%. Emerging markets 9.88%. These numbers sit alongside months - and sometimes years - of the kind of volatility we're seeing right now.

Property and bonds have had a rougher time over the shorter periods, which reflects the rate environment of the past few years. But even there, the longer-term picture is more balanced.

None of this means markets will continue performing in line with history. But it does provide some useful context when a single month feels like a lot.

The honest read on where things stand

April was better than March. But "better than March" isn't the same as "clear skies ahead."

The Hormuz situation has no obvious resolution. Inflation is proving stickier than central banks would like. Economic growth in Australia is slowing. And markets are still finding their footing around what a higher-for-longer interest rate environment actually means for asset prices.

For people who are approaching or thinking seriously about retirement - with super balances, investment properties, and long-term plans in play - the current environment is a reasonable prompt to think about how your overall portfolio is positioned. Not necessarily to make changes, but to understand what role each part of your wealth is playing, and whether the structure still makes sense given what's unfolding.

Volatility tends to feel more personal when you're closer to the point where you'll actually need to draw on your savings. That's not a reason to react - but it is a reason to have clarity.

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For the full April market update including asset class returns across one, three, five, seven and ten year timeframes, download our April monthly report here.