Globally equity markets were mixed in April. In the US, the S&P 500 rose +1.5%, the Nasdaq was flat, whilst in the UK, the FTSE 100 rose +3.1%. In Australia, the ASX All Ordinaries Accumulation Index rose +1.8%. Top performing sectors were Real Estate, Technology and Industrials, whilst materials significantly underperformed, driven by fears around the Chinese economy and a sharp decline in the iron ore price. Of note, gold stocks continued their stellar performance in recent months. Bond yields in the US and Australia were broadly flat over the month. Commodities were weaker, with coal (thermal and coking), copper, iron ore and oil prices all declining. 

Regarding monetary policy in Australia, after 10 hikes in a row since May 2022, the RBA paused in April, stating a desire to see what impact the recent rate rises are having on the economy. To recap, the RBA has increased the official cash rate by 350 basis points or 3.5% in less than a year, the fastest tightening cycle on record. Inflation in Australia is currently ~7%, which continues to be well above the RBA's targeted range of 2%-3%, however there are some early signs that it may have peaked. At this point, it is difficult to forecast how the central banks will approach the current environment where inflation is still too high, albeit showing clear signs of moderating. Realistically we believe more rate hikes may be needed over the next 6-12 months, however we believe we are near the end of the rate hiking cycle. On a more positive note, and of more relevance for equity investors, we continue to see increasingly attractive valuations across a wide range of small to mid cap stocks on the ASX, where investor sentiment remains weak due to uncertainty around the earnings impact from the interest rates rises over the last 12-18 month.