As April drew to a close, financial markets continued to be dominated by developments in the Middle East rather than by underlying economic trends. Although a military de‑escalation between the US and Iran offered temporary relief, the continued closure of the Strait of Hormuz kept energy markets under strain, driving oil prices higher and sustaining inflation concerns. Equity markets nevertheless rallied, led by the US and emerging markets, where strong earnings growth and ongoing investment in artificial intelligence supported sentiment, while Europe lagged behind. Bond markets remained cautious as fears of renewed inflation increasingly outweighed concerns about slowing growth. Against this still fragile and uncertain backdrop, we maintained a neutral equity allocation and an underweight in bonds, favouring a prudent stance as markets balance geopolitical risks, elevated energy prices and diverging regional growth dynamics.

Highlights this month:

• Military de-escalation in the Middle East, but Strait remains closed
• Investment in AI determines differences in growth and earnings
• Neutral equity allocation out of a sense of caution