South African equities staged a modest recovery in April following March’s sharp sell-off, although gains lagged well behind the strong rebound seen in global markets. The FTSE/JSE All Share Index rose +1.0% MoM, supported by strength in financials and industrials, while the FTSE/JSE All Bond Index outperformed with a +3.3% MoM gain as yields retraced some of March’s spike. SA-listed property also rebounded, advancing +4.4% MoM. Performance within equities reflected a clear rotation away from the resources complex. The FTSE/JSE Africa Resource 10 Index declined -2.7% MoM, as continued weakness in precious metal prices weighed on miners. In contrast, financials (+2.6% MoM) and industrials (+2.6% MoM) posted solid gains, supported by banks, diversified miners and selected SA Inc recovery names. The month was characterised by a shift in market leadership, with investors rotating out of the precious metals counters that had driven prior outperformance and into more domestically geared and diversified sectors. In US dollar terms, MSCI South Africa delivered a modest positive return of +1.4% MoM, but materially underperformed both MSCI World (+9.5% MoM) and MSCI Emerging Markets (+14.5% MoM), highlighting the local market’s sensitivity to global capital flows and commodity dynamics.
South Africa’s macroeconomic backdrop became more nuanced in April, with early signs of rising inflation pressures emerging. Headline inflation edged higher to 3.1% YoY, while core inflation also accelerated, suggesting that underlying price pressures may be building. Importantly, these data points largely pre-date the full impact of the global energy shock, which is expected to feed through more meaningfully in coming months. The South African Reserve Bank maintained a cautious and somewhat hawkish tone, highlighting risks of second-round inflation effects and signalling a potential shift toward a tighter policy stance if pressures persist. Bond yields declined modestly over the month, with the 10-year government yield falling back below 9%, while the rand strengthened +1.6% MoM against the US dollar, providing some support to local assets.
Global markets delivered a powerful rebound in April, with investors largely looking through ongoing geopolitical tensions and instead focusing on resilient earnings and renewed enthusiasm for artificial intelligence-driven growth. The MSCI World Index rose +9.5% MoM, its strongest monthly gain since 2020, recovering sharply from March’s drawdown. This rally was led by growth stocks, particularly within the technology and semiconductor sectors, as AI-related investment themes regained momentum. Emerging markets were the standout performers, with the MSCI Emerging Markets Index surging +14.5% MoM, driven by exceptional gains in Taiwan and South Korea, both key beneficiaries of the global semiconductor supply chain. Despite the strong equity performance, macro risks remained elevated. The ongoing US/Israel/Iran conflict continued to disrupt energy markets, with Brent crude trading in a wide range before ending the month around US$114/bbl. While oil prices were slightly lower on a MoM basis, intra-month volatility remained extreme, reflecting uncertainty around supply disruptions linked to the Strait of Hormuz. Commodity performance was mixed: industrial metals benefited from strong demand linked to AI infrastructure buildout, while gold declined -1.1% MoM.
US equities led the global rally, supported by a robust earnings season and renewed investor appetite for technology stocks. The S&P 500 surged +10.4% MoM, while the Nasdaq gained over +15.6% MoM, both reaching record highs. Market performance was driven by strong results from mega-cap technology companies, particularly those exposed to AI, with companies such as Alphabet, Amazon and NVIDIA delivering significant upside surprises in revenue and earnings. Investor sentiment was further supported by a temporary ceasefire announcement early in the month, although geopolitical uncertainty remained a key background risk. On the policy front, the Federal Reserve kept rates unchanged, maintaining a cautious stance amid rising inflation pressures linked to higher energy prices. US Treasury yields moved modestly higher, while the US dollar weakened by -1.9% MoM over the month, providing additional support to global risk assets.
European equity markets also recovered from March’s losses, although performance lagged the US. The MSCI Europe ex-UK index rose +5.1% MoM, supported by resilient corporate earnings as France’s CAC advanced +3.8% MoM and Germany’s DAX outperformed with a +7.1% MoM gain. However, the region remained highly sensitive to energy price volatility, given its reliance on imported energy. Inflation in the eurozone accelerated to 3.0%, driven largely by higher energy costs, reinforcing concerns around the economic impact of sustained energy shocks. In the UK, equities posted more modest gains, with the FTSE 100 rising around +2.0% MoM. Higher inflation, which increased to 3.3% YoY, and expectations of further monetary tightening tempered investor sentiment.
Emerging markets delivered a standout performance in April, significantly outperforming developed markets as global risk appetite improved and the US dollar weakened. The rally was heavily concentrated in Asia, particularly in markets leveraged to the global semiconductor cycle. China’s equity markets also posted solid gains, with the Shanghai Composite rising +5.7% MoM and the Hang Seng up +4.0% MoM, supported by accommodative policy and a pro-growth stance from policymakers. China’s macro data remained mixed but stable, with manufacturing activity holding in expansionary territory, while services activity softened slightly. Overall, improving sentiment and policy support helped stabilise markets despite lingering global uncertainties.
The hedge fund bounced back into positive territory in April, as gains from the long book outweighed detractors from the short book. Performance on the long side was driven primarily by positions in Grindrod, followed by Piraeus and Reinet, while Tencent was the largest detractor during the month. Within the short book, modest gains were generated from positions in physical gold and the telecom sector; however, these were more than offset by losses from index protection and positions in the diversified mining sector.