Author:
David Cooke
Co-Chief Investment Officer ,
Saltus Asset Management Team
Reviewed by: Tom Matterson, Investment Manager, Saltus Asset Management Team
April marked a remarkably strong rebound in risk assets, following the sharp drawdown experienced in March.[1] A combination of improving geopolitical sentiment and an exceptionally robust US corporate earnings season helped restore investor confidence, allowing equity markets not only to recover their earlier losses but, in some cases, to push on to new highs.
The key catalyst for this change in tone was the start of negotiations aimed at ending the war with Iran.[2] While far from conclusive, the shift from escalation to dialogue was enough to prompt a reassessment of worst‑case scenarios that had been rapidly priced into markets during March. At the same time, company results in the United States consistently exceeded expectations, reinforcing the message that underlying economic momentum remains resilient despite the recent surge in uncertainty.[3]
That said, it would be premature to declare victory. There remains a significant degree of uncertainty as we move forward. Firstly, the conflict itself is not yet over, and setbacks remain entirely possible. Secondly, even if tensions ease, the longer term economic impact of elevated energy prices becomes more damaging the longer they persist. High oil prices act as a drag on growth and place renewed upward pressure on inflation, complicating the task for policymakers and investors alike.
Nowhere was this tension more visible in April than in the oil and energy markets. Brent crude remained extremely volatile, trading in a wide range between roughly $100 and $110 per barrel and standing around 70% higher than a year ago, as the Strait of Hormuz remained effectively closed.[4] This ongoing supply disruption continues to represent the single most important macro risk facing the global economy, and it is the primary reason why markets remain so sensitive to geopolitical headlines.
Central banks, meanwhile, find themselves largely paralysed. Policymakers are caught between two competing risks. On the one hand, the oil shock threatens to slow growth, which would ordinarily call for easier monetary policy. On the other, it risks reigniting inflationary pressures, which would argue for tighter policy. With the balance between these forces still unclear, most central banks have opted to remain on hold, waiting for clearer evidence before adjusting their stance.[5] This indecision has contributed to increased volatility across government bond markets, where yields have moved sharply in response to shifting expectations around growth and inflation.[6]
Equity markets told a rather different story. US equities staged a powerful rally during the month, driven by an excellent earnings season and the renewed dominance of the artificial intelligence (AI) theme.[7] US companies reported better‑than‑expected results and struck a broadly confident tone about the months ahead, with technology and semiconductor firms standing out in particular.[8] Spending on technology capital expenditure continues to accelerate, underpinning productivity gains and supporting US economic growth. The AI investment cycle, which briefly faded into the background during March’s turmoil, has re‑emerged as a central pillar of the equity bull case.[9]
Taken together, these cross‑currents help explain why April felt like a month of recovery rather than resolution. Volatility remains elevated, and sentiment can still turn quickly in response to geopolitical or energy‑related developments.
In this environment, having patience and remaining humble is essential. Forecasting outcomes with confidence is extraordinarily difficult when geopolitical risks are so prominent. What we can say is that the global economy entered this period of stress in relatively good shape, and corporate balance sheets – particularly in the US – remain strong. That resilience has been clearly on display over the past month.
As always, we continue to focus on diversification, valuation discipline and long term opportunity. Periods of heightened uncertainty can often create the most attractive entry points for patient capital, even as risks remain elevated, So too do the potential rewards for those willing to look beyond the immediate noise. Our role is to navigate that balance carefully on your behalf, remaining alert to risks while positioning portfolios to benefit from the opportunities that inevitably emerge.
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All authors have considerable industry expertise and specific knowledge on any given topic. All pieces are reviewed by an additional qualified financial specialist to ensure objectivity and accuracy to the best of our ability. All reviewer’s qualifications are from leading industry bodies. Where possible we use primary sources to support our work. These can include white papers, government sources and data, original reports and interviews or articles from other industry experts. We also reference research from other reputable financial planning and investment management firms where appropriate.