Global Market Insights: April 2023

World markets summary:

After a volatile first quarter of 2023, April was relatively becalmed. Stock markets in most regions advanced modestly, led by a surprisingly resilient UK market which shrugged off another double-digit inflation print.

The only notable blemish came from Emerging Markets, which declined after tensions simmered between the US and China following a pickup in military drills around the Taiwan Strait.

Earnings season also kicked off in earnest during the last couple of weeks of April. US banks were in focus following March’s regional banking crisis, with a clear divergence in fortunes highlighted between big and small as JP Morgan led the way with strong profit figures. However, despite earnings releases being a mixed bag it was technology companies that stole the show in terms of performance, with large technology behemoths continuing their stellar year-to-date performance run. 

Fixed income markets were also relatively quiet in April despite the US Federal Reserve’s favoured inflation metric, Core Personal Consumption Expenditure Price Index (Core PCE), surprising to the upside and the UK posting an unexpectedly strong print. Yields ticked upwards in the UK and to a lesser extent in Europe too, and were down slightly in the US as Central Banks geared up for a further, and possibly final, interest rate hike in early May. 

On an economic front, news in April was generally positive. China continued to show signs of a strong recovery since reopening from COVID-19 lockdowns and Western markets continued to show resilience, albeit with some signs of slowdown amongst the figures released. This was most prevalent in the US, where first quarter Gross Domestic Product (GDP) growth figures – revealed in the last week of April – showed growth slowing further than expected.

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Our weightings are based on sterling as a base currency.

United Kingdom (UK)

The Bank of England looks set to hike rates by 0.25% at their next meeting to bring down the stubbornly high level of inflation. UK Inflation did ease to 10.1%, however it did not fall as much as expected due to upward pressure from food and drink prices, which accelerated at their fastest pace since 1977. This now marks the two-year anniversary of UK inflation being above the 2% target.

Economic data remained mixed in April, with consumer confidence rising to the highest level since the second quarter of 2022 while retail sales declined, mostly driven by non-food stores with feedback from retailers indicating that poor weather conditions affected sales. The unemployment rate also increased, albeit from low levels.

Earnings season has kicked off with results across the board being generally positive, led by UK bank HSBC, which should be somewhat of a precursor for the rest of the UK banks. This came despite the banking panic we saw last month as banks’ profits have benefitted from higher interest rates.

Pound sterling has continued to trend upwards, and as of the end of the month was above 1.25 against the US dollar.

United States (US)

Economic data was generally weak in April as the US economy felt the hangover of the banking crisis in March and a slowdown in manufacturing that has been ongoing since the end of last year.

Although they did rebound from last month’s three-year low, manufacturing survey results showed the sixth consecutive month of contraction in activity. This included data which showed almost three-quarters of this part of the economy is currently in decline, as well as indicating inflationary pressures remained abundant.

A gauge of leading economic indicators also inferred slowdown, falling for the ninth month in a row. Ominously, this measure has only ever fallen this significantly three times in the last 25 years: during 9/11, the Great Financial Crisis of 2008/09, and COVID-19.

Consumer-facing data was mixed, with increasing participation and lower unemployment parred by rising jobless claims and weak retail sales. Housing data was also varied, as existing home sales and house prices in general fell but new home sales, albeit a lower percentage of total home sales, rose significantly.

Despite the apparent slowdown, highlighted by a weak GDP print, the market continued to move modestly higher, at least at a headline level. So far this year the biggest technology-related names in the S&P 500 are up over 40%, while the other 492 names are down on average. This highlights the extent of the dominance of a few companies, perceived as “safe havens” and beneficiaries of recent developments in Artificial Intelligence.

Weakness in economic data is increasingly being reflected by the average stock in the index, and especially in smaller companies. We remain cautious on the outlook for the US stock market and are particularly wary of valuations and the potential for weaker earnings later in the year amongst said technology names.


Europe had a steady month of trading, with all of the major stock indices up low single digits. To highlight the extent of the recent strength, Europe is now up 30% relative to the US stock market since lows in September. This is mostly due to falling gas prices and stronger than expected economic data, which have eased recessionary concerns. Activity has, for the most part, remained robust. However, there are some signs of weakness beginning to emerge in certain parts of the economy.

Evidence of slowdown was apparent in first quarter growth, where the Eurozone economy grew at a slower pace than expected by market participants. Germany registered no growth while the economies of France, Italy and Spain somewhat expanded. Eurozone core inflation (excluding energy and food prices) unexpectedly slowed in April, falling for the first time in 10 months. Germany’s ZEW Index of economic sentiment fell for the second month in a row after five consecutive months of increase prior to this.

Headline inflation, however, did rise for the first time in six months in April which has slightly blurred the picture ahead for the European Central Bank meeting in the coming days.

LVMH, the luxury goods specialists, became the first European company to reach a $500bn valuation in Europe after revealing strong quarterly results, boosted by the reopening of the Chinese economy.

Asia and Emerging Markets

Emerging market stock indices lagged developed market peers this month with Brazil, Japan and Shanghai all up low single digits while Hong Kong was down.

Investors seem reluctant to reward encouraging economic data bred from the Chinese recovery from COVID-19, perhaps because of a perceived lack of significant fiscal stimulus from the Chinese government. Nonetheless, investors are more likely to be rewarded for their patience once the rebound in activity is reflected in results at the individual company level.

Another explanation for the tepid performance of Asian markets could be due to the mixed global economic data that is coming through. Like the rest of Europe, UK inflation came in hotter than expected in March, while disinflation is continuing to be seen in the US. The potential for the short-term rate outlook to be higher in Europe may have a resulting negative effect on emerging market exports in particular. Market Purchasing Managers’ Indices were weaker than expected for manufacturing and stronger for services. We expect consumer spending to continue to skew towards services over the rest of the year.

The recovery in Chinese industrial production has been slower than expected, partly down to weakness in Western growth, and has added to softness in commodity pricing. 

Fixed income

Bond yields climbed during the month following several key inflationary readings that came in higher than forecast by economists. First, was the UK Consumer Price Index, which was expected to fall below 10% but instead held above it – led by the sharpest increase in food and drink prices since 1977. Second, was Core PCE in the US which slowed to 4.6% but was more elevated than expected. And lastly, Japanese inflation also surprised to the upside although bond yields declined towards the end of the month after the new Bank of Japan Governor’s speech.

There were some encouraging signs in the US, with the Producer Price Index experiencing the biggest decline since April 2020 and the Consumer Price Index increasing 0.1%, much less than market expectations. China’s annual inflation rate came in much lower than expected at 0.7%, the lowest reading since September 2021.

US Treasury yields rallied late in the month, climbing the most at the front end with two-year yields finishing 0.12% higher at 4.07%, while the 10-year yield rose 0.7% to 3.52%. Strong gains in equities and rallies in regional bank shares added fuel to the selling of treasuries.

New Bank of Japan Governor Ueda did not implement a change to the current yield curve control policy. However, a long-term policy review has been announced and this is expected to take up to a year and a half, a lot longer than investors were initially expecting. Bond yields and the Japanese yen fell on the back of this news.


Oil was fractionally down in April after giving back the gains made in the first half of the month in response to the announcement by The Organisation of the Petroleum Exporting Countries + (OPEC+) to cut over 1 million oil barrels per day. This equated to the longest run of monthly losses in eight-years after falling for the sixth month straight. The price drop in the second half of the month was due to a lack of additional Chinese policy stimulus, and on the expectation of a further US interest rate rise increasing the probability of the US economy tipping into recession. In the case of a US recession, consumption typically drops by 1-2 million barrels per day, but this would likely be met by a further production cut from OPEC+. Given the GDP outlook in 2023, demand is expected to grow by 2.5 million barrels per day and if the supply doesn’t keep pace, oil prices should find support going forward.

Gold was flat on the month, hovering around $2,000, as investors weighed on the implications of the anticipated interest rate rise. The resulting US dollar strength will work against gold, given that the US dollar is the main rival safe haven, but gold prices will be supported if the rate rise pushes the US into recession.


After providing contradictory data in March, Rightmove and Nationwide indices both suggested an increase in UK house prices in April on a monthly basis. The Nationwide House Price Index1 increased 0.5% in April, defying expectations of a 0.4% drop and following a decline of 0.7% in March. This was the first rise in eight months, bringing an end to the greatest house price collapse in 14 years. China’s house prices also appear to have turned a corner in March, after new home prices displayed the greatest rise in 21 months. The market will now be impatiently awaiting April’s figures for further confirmation of the trend reversal.

1 Nationwide House Price Index, 30 April 2023

Important Information

All Index data figures are sourced by Morningstar and correct as at 30 April 2023, unless otherwise stated.

The value of investments or any income arising from them may fluctuate and are not guaranteed. Past performance is not necessarily a guide to future performance.