April was an extraordinary month for global sharemarkets, powered by the American technology giants. US stocks closed their best month since 2020 at record highs as investors bet the AI boom will deliver a windfall to America’s tech behemoths.

The S&P 500 (the most significant global sharemarket bellwether) climbed 10% in April – its biggest monthly jump since the November 2020 Covid-19 vaccine breakthrough – as the market rebounded from the sell-off triggered by spiking energy prices as the Middle East conflict erupted.

US Tech Booming

Technology stocks have powered the global equity comeback, sending the tech-heavy Nasdaq index surging 15% in April, its best month since April 2020. Analysts revised their profit forecasts to new highs, banking on booming AI infrastructure spending by the Magnificent 7 to support economic growth, with earnings upgrades extended across multiple sectors; even the Dow Jones rose by 7%.

Mega-cap tech continues to deliver exceptional earnings growth, and investors focused on revenues as an indicator of return on AI investment spending. Amazon, Alphabet, Meta and Microsoft have reported collective revenue growth of 20% and earnings growth of 60% this quarter (although “other income” driven by private equity investments contributed a record 1/3 of those profits). Within this group, share price performance mirrored revenue results and guidance. These four companies (GOOGL, MSFT, AMZN, and META) represented close to $12 trillion in market cap – larger than the equity markets of the United Kingdom, France, the Netherlands and Australia combined.

The AI capex boom shows no sign of slowing. Analyst estimates for 2026 AI hyperscaler capex spending total $700 – $750 billion, 80% above spending in 2025. The surge in spending estimates is driving a similar rise in earnings estimates for AI infrastructure companies, helping lift the earnings outlook for the broad market and skewing risks to S&P 500 earnings estimates to the upside.

Global Equities

The Iran war will continue to be a principal factor in markets. Despite the ongoing and fragile ceasefire, the situation stays fluid and oil flows through the Strait of Hormuz remain extremely low, with risks to economies and markets growing the longer these supply disruptions continue.

Globally, market expectations are for real GDP growth of ~3.1% year-on-year in 2026 amid growing headwinds from higher energy prices. Global core inflation is expected to decline to ~2.4% by the end of 2026, reflecting a fading tariff boost and further normalisation in housing and wages inflation but boosted by higher energy prices.

Continued earnings growth in the US could drive equity market appreciation through to year-end. Tactically, however, sharply narrowing breadth, with most gains concentrated in the tech giants, has historically indicated equity market risk. Elevated equity investor positioning today adds to that risk.

Nevertheless, the enthusiasm was widespread with many other countries experiencing exceptional gains: Japan up 16%, Germany +7%, China +8% and France +4%. Australia and Britain dragged the chain with gains of only 2%.

We expect the Fed to deliver at least one, and maybe two 25bp cuts this year for a terminal rate range of 3-3.25%, although the risks to this forecast are probably tilted toward a longer pause.

In the Euro area, markets predict below-potential real GDP growth of 0.9% in 2026, reflecting higher energy prices and tighter financial conditions owing to the Iran conflict. We expect core inflation to rise in 3Q26 and remain there for the rest of the year amid higher energy prices, and the ECB to deliver further rate hikes to combat inflation before cutting back in 2027.

In China, real GDP growth of 4.5-5.0% in 2026 is likely, as resilient export growth, continued government policy easing, and a decreasing drag from the ongoing property market downturn offset headwinds from higher energy prices and sluggish domestic demand.

Australian Inflationary Pressures

In Australia, the Q1 CPI report provided the first official estimate of the impact on local prices of the Middle East conflict. Headline inflation accelerated sharply to 4.6% year-on-year on the back of a 33% surge in auto fuel prices in March alone. Fortunately, a portion of this spike has since unwound following the fuel excise cut, although fuel prices are still materially above the pre-conflict level.

While there were signs of price pressures across home-building, vehicle repair and insurance, it is too early to find evidence of pass-through. That said, the underlying trimmed mean inflation rose 0.8% in Q1, with annual growth at 3.5% year-on-year, a full percentage point above midpoint of the target range. Notably, March’s data pre-dates the wide range of price increases reported for building products and other items which came into effect in April.

Following the CPI release, the futures markets expect the RBA to increase cash rates by 25bps to 4.35% at the May policy meeting. The combination of an elevated starting point for inflation and risk of pass-through will likely compel the RBA to act pre-emptively to hold inflation. This is notwithstanding the Budget to be delivered on 12 May, which could have significant consequences for future monetary policy.

Australian Business and Consumer Sentiment

The Westpac–Melbourne Institute Consumer Sentiment Index fell heavily in April, declining 12.5%. This is a sobering data point and highlights the despondency affecting Australian households amid rising petrol prices, increasing food costs and the threat of higher interest rates.

Coming in quick succession was the double blow to confidence: first the collapse in consumer sentiment, followed shortly after by a plunge in business sentiment. The business survey by NAB, the first since the war in the Middle East broke out, also showed confidence collapsing. Business confidence recorded the second largest monthly fall on record.

The poor sentiment measures are common across virtually all major industrialised economies, even as business investment and consumer spending have generally held up.

How to Reconcile Poor Sentiment but Resilient Spending?

This widespread despondency among both business and household sentiment measures suggests “confidence” is collapsing under the burden of unaffordable prices, war, tariffs, rising oil prices, climate anxiety, inter-generational resentment, and toxic political leadership. Yet US consumers absorbed tariffs through lowering their savings rates and are increasing spending; German retail sales are higher than pre-pandemic levels; the same is true in Australia and the UK.

Perhaps part of the answer lies in the spread of social media, with the combination of fake news and negative sensationalism. “Doom-scrolling” through the news feed on phones is commonplace. That informs the sentiment numbers of business media report; however, it seems increasingly likely that consumers have also recalibrated their spending patterns. When it comes to economic actions, perhaps most people can distinguish what they see on their phones from reality.

Commodity Markets

The World Bank’s Commodity Markets Outlook, published in late April, presents a detailed picture of one of the Middle East war’s most important global economic consequences, namely its impact on supplies and prices of major commodities including oil, LNG, fertilizer, sulphur, refined petroleum products and much else.

The blockage of the Strait of Hormuz created a historic shock to commodity markets, and resulted in the largest monthly oil supply loss on record in March. Assuming the most acute phase of commodity trade disruptions ends in May or June, with shipping volumes transiting through the Strait of Hormuz gradually returning to near pre-war levels by October, the World Bank projects average commodity prices to rise by 16% this year – the first annual increase since 2022. This would leave prices about 25% higher than expected in January 2026.

Commodity prices were mixed across April, with Crude Oil up around 4%, Brent up around 7%, while Gold, Silver and Platinum all fell slightly. Copper was up 7%, and iron ore managed to stay above US$100/t.

In our view, the medium-term thesis for firm commodity prices is still intact: fiscal expansion, rearmament, electrification, AI-related infrastructure build-out and currency debasement dynamics are supportive of real assets.

Global sovereign yields rose over the month as markets factored in the inflationary pressures from the energy shock. US 10-year Treasuries ended April at 4.37% (up 6bps), Australian 10 years at 5.01% (up 9bps), UK gilts at 5.01% (up 16bps), and German bunds at 3.04% (up 4bps). With the uncertainty created by the war, we expect rising volatility in bond markets as oil prices, inflationary pressures, hits to confidence, and supply disruptions endure.

The Australian dollar was higher against the USD and ended the month at US$0.72.

Conclusion

As always, we suggest a prudent policy of asset class diversification, a focus on quality and sustainable yield, and a strategy of riding out short-term market volatility by focusing on long-term performance.