Global Market Overview
April delivered a powerful and broad-based recovery across global markets, unwinding a significant portion of the losses sustained in March. The S&P 500 returned +10.47% in USD and the Nasdaq 100 surged +15.65% in USD, as investor sentiment shifted sharply in the absence of further Middle East escalation. The MSCI World returned +9.59% in USD, while the MSCI ACWI returned +10.17% in USD. Emerging markets were the standout regional performer for the month, with the MSCI Emerging Markets Index gaining +14.71% in USD, reflecting a combination of a weaker US Dollar, improving risk appetite and continued broadening of global market leadership. Global listed property, as measured by the S&P Global REIT Index, returned +8.81% in USD. The FTSE 100 returned +5.40% in USD terms and the JPX-Nikkei Index 400 gained +8.81% in USD, while the Hang Seng returned a more modest +4.14% in USD.
The investment team characterised April’s rally as a market that had been “over-hedged for chaos” and was therefore under positioned for a right-tail recovery. The central question posed during the month — whether markets were displaying ignorance or wisdom in the face of ongoing Middle East conflict, sticky inflation and uncertain earnings — remained unresolved. The sharp rebound suggested that positioning dynamics and relief from the absence of further geopolitical escalation were the primary drivers, rather than a fundamental improvement in the macro backdrop.
The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% at its April meeting, as expected. However, the meeting was defined by the most significant internal split since 1992, with an 8–4 vote and meaningful dissent from both hawkish and dovish flanks. This internal fragmentation reflects the complexity of the current environment: US headline CPI rose 3.3% year-on-year in March, largely driven by energy, while core CPI remained more contained at 2.6% year-on-year. Adding to the institutional uncertainty, Kevin Warsh cleared a key Senate Banking Committee hurdle, advancing his nomination as the next Fed Chair — a development that reinforced the sense that the US policy backdrop is entering a more contested phase. The US labour market showed signs of stabilisation, with nonfarm payrolls increasing by 178,000 in March. However, the unemployment rate edged up to 4.3%, partly reflecting a decline in labour force participation.
In the Eurozone, the European Central Bank left rates unchanged with the deposit rate at 2%. Headline inflation surged to 3.0% year-on-year in April on a flash estimate, driven primarily by a 10.9% rise in energy prices, while core inflation eased slightly to 2.2%. The Bank of England similarly held rates at 3.75%, adopting a hawkish hold amid a difficult balance between rising inflation and fragile growth. The Bank of Japan left its policy rate at 0.75%, but three of nine board members pushed for an immediate hike, signalling that a rate increase in coming months is increasingly likely. Oil prices continued to rise, with Brent crude gaining +10.02% during the month to close above $114 per barrel, keeping the inflationary impulse from the Middle East conflict firmly in play across all major economies.
South African Market Overview
South African markets participated in April’s global recovery, though with considerably less momentum than offshore peers. The FTSE/JSE All Share Index returned +1.65% in ZAR for the month, bringing the year-to-date return to +1.02% in ZAR. SA Listed Property was the strongest local performer, gaining +5.40% in ZAR, benefiting from the pullback in bond yields and improved sentiment toward yield-sensitive assets. The FTSE/JSE All Bond Index returned +3.27% in ZAR, while cash, as measured by the STeFI Composite, returned +0.54%.
The Rand strengthened modestly during the month, with the USD/ZAR rate moving from 16.94 to 16.67, a 1.60% appreciation. This provided some cushion for domestic assets and reflected the broader weakness in the US Dollar during the risk-on recovery.
Leadership on the JSE was notably split. Among the top performers, Anglo American gained +9.96% on solid Q1 results, while Investec (+7.40%), BHP (+6.32%), Anheuser-Busch (+5.98%) and Sasol (+5.62%) all contributed positively, with Sasol benefiting directly from elevated oil prices and strong demand for fuels and chemicals. In contrast, precious metals and PGM miners were the month’s worst performers, with Clicks Group declining -10.93%, Impala Platinum -9.53%, Valterra Platinum -9.49%, Gold Fields -9.43% and AngloGold Ashanti -9.41%. Gold fell -1.27% during the month, having declined more than 12% since the start of the Middle East conflict, while platinum retreated over 19% from its pre-conflict levels, dragging the major South African PGM producers with it. The investment team views this divergence as a direct consequence of the market’s rotation from safe-haven and precious metals exposure toward energy-linked and globally cyclical names — a rotation that the team had been monitoring closely.
The domestic macro backdrop became more challenging during April. Local headline CPI rose to 3.1% year-on-year in March, capturing only part of the oil shock, with economists expecting April CPI to approach 4% as fuel price increases feed through. Fuel prices jumped approximately 25–30% in early April, with a temporary R3 per litre cut in the general fuel levy partially cushioning the blow for April and May. The SARB expects inflation to average approximately 4.0% in Q2 2026 before easing back toward 3% by mid-2027, assuming energy markets stabilise. Core inflation remains subdued at approximately 2.8%, suggesting the near-term inflationary pressure is predominantly energy driven. The IMF cut its 2026 growth forecast for South Africa from 1.4% to 1.0% following the outbreak of the Middle East conflict — a meaningful downgrade that places South Africa near the bottom of emerging and developing economies for growth this year.
Key Insights from Weekly Investment Team Meetings
April’s global recovery was powerful, but the investment team remained cautious. The central question debated throughout the month was whether markets were displaying ignorance or wisdom by rallying sharply in the face of ongoing Middle East risk, persistent inflation and uncertain corporate earnings. The team maintained a measured risk posture in response, resisting the impulse to chase the recovery.
- US equity led the rebound, with Nasdaq and S&P 500 recovering sharply. The Nasdaq 100 gained +15.65% and the S&P 500 +10.47% in USD — a positioning-driven recovery rather than a fundamental re-rating. The team’s existing underweight to US equity relative to neutral meant portfolios participated selectively in this recovery rather than being fully exposed.
- Emerging markets delivered the strongest regional returns. The MSCI EM returned +14.71% in USD, extending the year-to-date outperformance relative to developed markets and reinforcing the case for geographic diversification that the team has maintained throughout 2026.
- Inflation risks remained elevated. Brent crude rose a further +10.02% in April, and US CPI surprised to the upside. South African fuel prices jumped sharply, and the SARB revised its Q2 inflation forecast higher. The investment team continued to view commodity-linked exposure as an appropriate hedge in this environment.
- SA PGM and gold miners underperformed significantly. The continued decline in gold and platinum prices weighed heavily on SA resource stocks, with major PGM producers declining between 6% and 10% during the month. The team monitored this divergence as a key domestic equity risk.
- Local fixed interest and listed property recovered meaningfully. SA bonds returned +3.27% in ZAR and listed property +5.40% in ZAR, providing positive contributions to domestically oriented portfolios and partially offsetting the modest performance from local equities.
Portfolio Performance and Strategy
The investment team maintained a deliberately balanced and cautious approach to portfolio construction throughout April. Despite the sharp global equity recovery, risk scores across local portfolios remained at neutral, reflecting the team’s view that the macro and geopolitical backdrop had not materially improved — markets had simply moved to price out the worst-case scenario.
The meaningful underweight in US equity relative to neutral, combined with overweight positions in commodities, above-neutral global fixed interest and elevated cash, positioned portfolios to participate in the recovery without being overexposed to the most expensive and momentum-driven parts of the global equity market. Commodities continued to serve as both a return driver and an inflation hedge, with oil prices remaining elevated and energy-linked equities outperforming.
The recovery in South African bonds and listed property contributed positively to outcomes in domestically oriented portfolios. The Rand’s modest strengthening and the improvement in local bond momentum supported the fixed interest and property allocations, demonstrating the value of maintaining diversified local exposure even as the broader equity market lagged global peers.
The team’s ongoing scepticism about whether the April rally represented genuine macro improvement or a positioning reversal informed its decision to hold discipline rather than add risk aggressively. With inflation remaining elevated across major economies, central banks divided on the path of interest rates, and oil prices continuing to rise, the balance of risks was not seen as sufficiently clear to justify a material increase in equity exposure. Diversification across regions, asset classes and return drivers remained the investment team’s primary risk management tool.
Source of all data: Morningstar, unless otherwise stated.
Jacques de Kock
Quantitative Analyst & Portfolio Manager
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