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Monthly markets review - April 2023

A look back on markets in April when equities notched up further gains.

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The month in summary

Global shares rose in April, supported by some resilient economic data. Emerging markets underperformed developed market equities amid weakness in Chinese shares. In fixed income, all main credit markets generated positive returns.

Please note any past performance mentioned is not a guide to future performance and may not be repeated. The sectors, securities, regions and countries shown are for illustrative purposes only and are not to be considered a recommendation to buy or sell.


US equities made limited gains in April. Investor optimism stemming from the Federal Reserve’s (Fed) anticipated moderation of monetary policy was tempered by the central bank flagging that economic growth is likely to soften. Uncertainty in the banking sector also continued.

The collapse of First Republic looked unavoidable by the end of April, and its demise represented the largest casualty yet triggered by 2023’s simmering banking sector stress. Ultimately acquired in a deal between the US government and JP Morgan, investors appeared to take the news in their stride; US banks in the S&P 500 index advanced in aggregate in April. Even so, some apprehension lingers over smaller banks.

Throughout the month it remained the consensus view that the Fed will raise rates in its May meeting by a further 0.25 percentage points, but that the central bank will then pause its policy tightening phase. The view was backed by economic data that indicated growth is waning, the labour market is showing signs of weakening, while inflation has appeared more controlled in recent months.

Equity market performance was influenced by gains from some of the index’s largest companies, including some of the large tech stocks. Industrial and consumer discretionary stocks weighed, with automobiles notably weaker. Tesla shares fell as its results showed that profits had been hurt by increasingly ferocious competition in the global electric vehicles market.


Eurozone shares made gains in April. All sectors advanced in the month aside from information technology (IT). Shares were supported by the release of some resilient corporate earnings. Top performing sectors included energy and real estate, which had previously underperformed so far this year. Utilities also saw gains. The IT sector fell after warnings from several semiconductor companies – both in Europe and elsewhere – that a slowdown in demand is lasting longer than previously expected.

Data showed that the eurozone economy returned to growth in Q1 with an expansion of 0.1% quarter-on-quarter after zero growth in the final three months of 2022. Germany’s economy saw no growth but other economies such as Spain and Italy saw stronger expansion. The pace of inflation in Germany slowed with a rate of 7.2% year-on-year expected for April, compared with 7.4% in March.

In terms of forward-looking data, the flash eurozone purchasing managers’ index (PMI) for April reached an 11-month high of 54.4. Growth was supported by the services sector but manufacturing output saw a decline. The PMI indices are based on survey data from companies in the manufacturing and services sectors. A reading below 50 indicates contraction, while above 50 signals expansion.


UK equities rose over the month. Financials were the top contributor, driven in large part by the banking sector which recovered in line with global trends as fears around the health of US banks receded somewhat. The globally diversified energy groups were another top contributor, supported by a recovery in oil prices as Saudi Arabia announced a surprise decision to cut oil production.

Domestically focused sectors held up well despite disappointing inflation and wages data and a resulting marked rise in UK interest rate expectations. The Office for National Statistics (ONS) revealed that headline UK inflation had failed to fall back below 10% as anticipated. Consumer price inflation only slowed to 10.1% in March (versus Bank of England expectations for 9.2%), from 10.4% in February.

Core inflation – which strips out volatile items including energy and food to give a clearer picture of underlying trends – was unchanged from February. At 6.2% the March number was higher than January. This added to expectations the Bank of England may need to raise rates again after May’s Monetary Policy Committee meeting in order to bring inflation down on a sustainable basis. Strong wages data published in April also did little to calm fears that the Bank may not be fully on top of inflation.


The Japanese stock market maintained its positive momentum during April with the TOPIX Total Return index up by 2.7% in local terms. The Japanese yen weakened further as the tone at the first policy meeting of the Bank of Japan (BOJ) under new Governor Ueda’s leadership sounded dovish. Yen weakness continued to support investor sentiment but at the same time it reduced the return for sterling or USD based overseas investors.

Foreign investors purchased Japanese stocks at a high pace during the month. This momentum was supported by the Tokyo Stock Exchange’s initiatives to boost corporate values and stock prices for companies with below 1x price to book ratio. There also seemed to be a “Buffett effect” after legendary investor Warren Buffett added to his Japanese equity investments.

The macroeconomic environment has been on track for recovery mainly thanks to inbound consumption. Inflation, as measured by CPI, remained at a historically high level while wage growth was also shown to have accelerated upon the spring wage negotiation between major companies and trade unions.

Retailers announced positive results for quarterly earnings and, in the last week of April, the full annual results for the Japanese fiscal year started to come out. These generally had a resilient tone. The upward momentum from the macro environment, yen weakness, and increasing focus on corporate governance reforms supported the positive outlook for corporate profits.

Asia (ex Japan)

Asia ex Japan equities recorded a negative performance in April, with sharp declines in China, Taiwan and Thailand offsetting share price gains in Indonesia and India.

China was the weakest index market in April, despite economic growth expanding at a faster rate than expected in the first quarter. Ongoing tensions with the US and other Western nations over Taiwan weakened investor sentiment towards the country.Share prices in Taiwan also ended the month in negative territory as demand for semiconductors, one of Taiwan’s main exports, declines due to weaker growth in other parts of the world.

Indonesia was the best-performing index market in April as the country accelerates its efforts to become a major player in the global electric vehicle (EV) supply chain by tapping its nickel reserves, a key raw material used for making EV batteries. Indian equity prices also achieved robust gains in April, driven by gains in real estate and information technology stocks.

Emerging markets

Emerging market (EM) equities declined in April, and underperformed developed market equities, as renewed US-China tensions arose. These concerned Taiwan, as well as potential new restrictions from the US administration on foreign direct investment into China.

China was the worst performing index market, despite some positive macroeconomic data which included better-than-expected Q1 GDP growth and export performance. Taiwan was also notably weak.

Turkey, where political uncertainty is rising ahead of May’s presidential elections, declined for a second month. Voting polls indicate opposition leader Kemal Kilicdaroglu is proving meaningful competition for President Erdogan.

Chile underperformed on the announcement of a national lithium policy, in which the government will partner with the private sector to share the benefits of the country’s abundant reserves. Korea also fell, although by less than the index, as the local currency’s depreciation against the dollar weighed on returns.

South Africa recorded a small positive gain in the month, finishing behind the Latin American markets of Mexico, Brazil and Colombia. India outperformed too, supported by some positive macroeconomic data including better industrial production and easing inflation, which meant the central bank kept monetary policy unchanged. Saudi Arabia posted a positive return as oil prices rose after OPEC production cuts were announced. Indonesia, where the rupiah appreciated against the US dollar, also outperformed.

The CE3 markets of Czech Republic, Hungary and Poland delivered strong returns, particularly Poland which was up double-digits in US dollar terms and was the best-performing index market in the month. European gas prices fell again in April as concerns over the Russia-Ukraine war faded and the European winter ended with gas storage near record highs.

Global bonds

The drop in bond yields seen in March as markets reacted to banking sector stresses did not continue into April, with yields beginning to creep up once more. Overall, markets were calmer compared to the previous month.

Markets are anticipating further near-term rate hikes from the Federal Reserve, Bank of England and the European Central Bank. The UK gilt market underperformed others as activity data was resilient and inflation surprised to the upside.

The Bank of Japan’s (BoJ) new governor pledged to keep the loose monetary policy unchanged for now, maintaining very low interest rates, but announcing plans to review past monetary policy moves.

US bond yields were largely flat with the US 10-year yield edging down from 3.47% to 3.42%, with the two-year dropping very slightly from 4.03% to 4.01%. Germany’s 10-year yield increased from 2.29% to 2.31%. The UK 10-year yield rose from 3.49% to 3.72% and two-year increased from 3.44% to 3.78%.

All main credit markets generated positive returns in April, as markets rebounded following a volatile March. Spreads tightened as markets recovered from an indiscriminate sell-off following the events surrounding Silicon Valley Bank and Credit Suisse, resulting in positive total returns across investment grade and high yield. Investment grade bonds are the highest quality bonds as determined by a credit rating agency; high yield bonds are more speculative, with a credit rating below investment grade.

The US dollar was weak against the euro and sterling. The Japanese yen weakened against the dollar after the BoJ’s announcement. Overall, the US dollar index was largely unchanged.

Convertible bonds could not benefit from the stock market tailwinds and the Refinitiv Global Focus convertible bond index was down -1%. Compared to global equities, the information technology bias in convertibles and the underweight in financials held back the asset class in April. It was another good month for primary market activity with $5.7 billion of new paper coming to the market. The US remained the dominant region but there was also strong issuance in Asian convertibles.


The S&P GSCI Index recorded a negative performance in April as weaker prices for agriculture, industrial metals and energy offset price gains in livestock and precious metals. Agriculture was the worst-performing component of the index, with sharp falls in the price of wheat and corn. Within industrial metals, the price of zinc, copper and aluminium all fell in the month, while lead and nickel gained.

Within the energy component, heating oil, gas oil and unleaded gasoline all recorded price declines, while crude oil, Brent crude and natural gas all achieved modest price gains. The Opec+ nations, a group of 23 oil-exporting countries, announced production cuts of more than one million barrels per day. Livestock was the best-performing component. Within precious metals, the price of silver and gold both gained in the month.


Digital asset markets performed well in April with Bitcoin and Ethereum returning 2.9% and 3.5% respectively. Digital assets are one of the best performing asset classes in 2023; Bitcoin is up 71% year-to-date. Bitcoin’s outperformance was idiosyncratic as liquidity shifted in the face of bank insolvencies.

The next milestone for the Ethereum upgrade was successfully completed this month allowing locked tokens to be removed for the first time in years. The extra liquidity didn’t have a negative price impact.

The US regional banking crisis has raised questions about how the digital asset industry should interact with the traditional banking system. All three banks that shut down in Q1 were involved in the industry. US regulators continued to focus on the industry and ultimately this is likely to lead to more clarity on the regulatory front.

The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

Table of fixed income returns April 2023Table of fixed income returns April 2023

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