TWD Monthly Market Update – April 2026
Broader Market Moves1
Macro Commentary
The S&P/ASX 200 experienced a volatile April, ultimately finishing higher, closing at approximately 8,666.30, up 2.18% for the month, although this masked a clear deterioration in sentiment into month end. The index traded near recent highs early in the month before selling off through the final weeks, as rising oil prices and renewed geopolitical tensions weighed on risk appetite. Beneath the surface, sector performance reflected a rotation toward defensives. Energy was the standout performer, supported by higher oil prices, while Utilities and Consumer Staples were more resilient. In contrast, growth and cyclical sectors including Information Technology, Financials and Materials came under pressure, reflecting a more cautious tone and the impact of higher bond yields.
Domestically, the economic backdrop remained relatively stable but showed further signs of moderating momentum. Labour market data released by the Australian Bureau of Statistics confirmed the unemployment rate held at 4.3%, with employment growth modest and participation easing slightly, pointing to a labour market that remains resilient but is no longer tightening. Business conditions improved marginally, with PMI data showing a return to expansion in manufacturing and a modest lift in services activity. The Reserve Bank of Australia left the cash rate unchanged at 4.10% at its April meeting, maintaining a cautious stance as it assesses persistent inflation pressures, particularly those linked to energy. The broader outlook remains constrained by these dynamics, with policy likely to remain restrictive.
Global markets were influenced heavily by developments in the Middle East, with escalating tensions involving Iran and ongoing constraints and elevated risk to energy flows through the Strait of Hormuz driving a sharp rise in oil prices. Importantly, this dynamic does not require a full disruption to materially impact markets, with even partial constraints sufficient to tighten effective supply and lift prices. This became the dominant macro driver through April, reinforcing a higher-for-longer interest rate backdrop and contributing to increased volatility across asset classes. Within this environment, the S&P 500 delivered a strong rebound, rising by just over 10.49% over April on a total return basis, supported by resilient corporate earnings and ongoing strength in consumer activity. Performance remained concentrated in large-cap technology and quality growth companies, where earnings outcomes have continued to exceed expectations, helping to underpin broader index returns. US economic data continued to present a mixed picture, with retail spending remaining firm while labour market indicators released by the United States Department of Labor showed early signs of softening at the margin. This leaves the Federal Reserve balancing still-solid growth against renewed inflation risks stemming from higher energy prices.
In commodities, gold prices were broadly stable over the month, supported by safe-haven demand and geopolitical uncertainty, although gains were limited by higher real yields and a firmer US dollar. Oil was the key driver of market dynamics, with West Texas Intermediate crude trading above USD 100 per barrel and moving higher at points during the month as geopolitical risks intensified. The increase in energy prices has reinforced inflation concerns and remains a central influence on bond yields, policy expectations and overall market sentiment.
Looking ahead, 2026 is shaping up to be another year dominated by geopolitics, with constraints to energy flows through the Strait of Hormuz driving a sharp rise in oil prices and raising the risk of stagflation in the global economy. Financial markets have so far absorbed this shock relatively well, with equity markets taking a more constructive view despite the volatility. Whether this proves to be sustained will depend largely on how long these constraints persist, with even partial disruption sufficient to keep energy prices elevated. Markets continue to weigh the potential for an agreement between the US and Iran, which is helping to anchor sentiment.
More broadly, the environment points to a period of moderate growth, elevated volatility and increased sensitivity to macro and political developments, including the US midterm cycle. Regionally, non-US markets may be better supported, benefiting from relatively more attractive valuations, a weaker US dollar and ongoing commodity supply constraints. In this context, equity returns are likely to remain positive but more uneven, with outcomes increasingly driven by earnings delivery and geopolitical developments rather than broad-based multiple expansion.
Against this backdrop, portfolio positioning remains focused on resilience and diversification. Exposure to energy continues to provide a degree of protection against inflation shocks, while allocations to high-quality equities and defensive sectors help mitigate downside risk in periods of market volatility. Within fixed income, maintaining a relatively shorter duration profile provides flexibility in an environment where interest rate expectations remain uncertain. While near-term conditions are likely to remain volatile, portfolios remains well positioned to navigate a range of outcomes, with a focus on balancing risk and opportunity as the macro environment continues to evolve.
1ASX 200 refers to SPDR S&P ASX 200 Fund (STW), S&P 500 refers to iShares S&P 500 (AUD Hedged) ETF, MSCI World refers to Vanguard MSCI Index International Shares (Hedged) ETF, NASDAQ 100 refers Nasdaq 100 Currency Hedged ETF, AU Comp refers to the Vanguard Australian Fixed Interest Index ETF, Global Agg refers to Vanguard Global Aggregate Bond Index (Hedged) ETF, Gold (USD) refers to the LSEG Gold Spot Price (USD)
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