April proved to be a markedly different month from March, despite ongoing tensions in the Middle East. While the Israel-US conflict with Iran remained unresolved and disruptions to shipping through the Strait of Hormuz persisted, markets became more comfortable looking through the near-term geopolitical risks. Oil prices remained elevated and consumers around the globe felt the pain at the pump, but fears of a worst-case supply shock eased somewhat as ceasefire discussions emerged and release of strategic oil reserves helped to cushion supply disruptions. This shift in sentiment allowed equities to rebound strongly after March’s sharp sell-off.

Equity markets staged a powerful rally globally, (notwithstanding the flat domestic market) recovering much of March’s losses. US equities surged with the S&P 500 and Nasdaq 100 reaching new highs as investors rotated back into growth and AI-related stocks. Semiconductors and hardware performed particularly well, reflecting strong earnings updates and continued capital expenditure linked to data centres and AI. Emerging Markets were standout performers, led by Taiwan and South Korea, as the AI supply chain rallied aggressively. Europe and Japan also posted solid gains, although performance was uneven across sectors.

Sector performance was more balanced than in March. Energy stocks continued to benefit from high oil prices but underperformed the broader equity rally as investors rotated into previously oversold growth sectors. US tech was the clear standout after being heavily sold in March (in particular legacy software companies vulnerable to AI disruption), while consumer discretionary stocks also recovered as recession fears faded somewhat. Defensive sectors lagged during what was very much a ‘risk-on’ month.

Bond markets were relatively stable with the Bloomberg Global Aggregate Index slightly into positive territory (when measured in NZD). Elevated oil prices kept inflation concerns alive, limiting the upside in government bonds – yet yields stabilised as central banks continued to emphasise patience and data dependence. Credit markets benefited from the improvement in risk sentiment, with spreads tightening modestly.

Australasian markets also improved with the Australian ASX 300 Index returning 4%, supported by large-cap resource and financial stocks. Ongoing concerns around domestic growth and higher funding costs continued to cap upside for NZ stocks, leading to near nil (flat) result for the month.

The New Zealand Dollar stabilised during April. After falling sharply in March, the NZD recovered modestly against the US Dollar, trading back toward 0.59 as global risk sentiment improved and the USD softened. Against the Australian Dollar, the NZD continued to trend lower, reflecting stronger Australian growth and commodity exposure. 

Following March’s sharp selloff, the World Equity Portfolio roared back to life, returning a massive 7.59% for the month of April. As market sentiment improved, investors turned their focus to the future, with key AI-related players Alphabet (+29.7%), Amazon (+23.3%), Cisco Systems (+14.8%), Schneider Electric (+13.9%), and Taiwan Semiconductor (+13.5%,) rallying. The portfolio’s other core holdings Caterpillar (+21.9%), Novo Nordisk (+11.3%), and Nvidia (+10.9%) performed well. New additions during the month, Broadcom (+30.7%) and GE Vernova (+20.3%) had blow-out months, and while we won’t have received all of that performance, the first glimpse looks good.

Defensive sectors lagged in what was very much a growth-driven up market – the Healthcare sector of the S&P 500 was down –3.5%, followed by Consumer Staples (-0.1%). Energy (-6.5%) and Utilities (-1.1%) corrected following their big boost last month, however, increasingly the market is paying attention to this area as questions are being asked about power supply bottlenecks as the AI datacentre buildout accelerates.

The Australasian Equity Portfolio had a strong result of +2.13% for the month with our top domestic performers being Mercury (+7.4%), Infratil (+7.0%), Freightways (+5.4%), and Meridian (+2.7%). Across the ditch, Maquarie Group (+18.4%), Goodman Group (+17.8%), Xero (+8.4%), and QBE Insurance (+7.0%) led. Sector-wise, the ASX 200 Information Technology (+15.2%) and Commercial Real Estate (A-REITs) (+10.4%) were the standouts, followed by Materials (+6.1%). Similarly to US sectors, the Defensive sectors lagged with Healthcare down –7.1% and Consumer Staples down –2.4%.

The World Bond Portfolio returned a positive result of +0.25% for April as global bond yields stabilised besides the absence of a permanent resolution to the US-Israel conflict with Iran. Many if not all central banks remained on hold, emphasising data dependence and patience, cautioning against any type of knee-jerk reaction.

Similarly, the New Zealand Bond Portfolio returned +0.32% for the month as RBNZ left the OCR unchanged. Longer-dated bonds initially moved higher but stabilised towards the end of the month. Increasingly the yield curve is pricing a higher path for interest rates moving forward.

The Investment Strategies had strong results for the month of the back of the positive returns in the Investment Funds – the returns ranged from +6.22% to 2.03%.