April 2023 market commentary

April provided some relief for investors following last month’s banking crisis volatility. Saudi Arabia and other OPEC nations announced a surprise decision to cut oil production by 3.7%, and G7 leaders in Japan made new commitments to renewable energy.

16 May 2023

Last month was fairly subdued for investment markets, giving investors some relief from the banking crisis volatility seen in March. In a relatively uneventful month most major developed market equity indices posted modest gains. In the UK the FTSE 100 rose by 3.4% in April. The Euro STOXX 50 index gained 1.8% and in the US the S&P 500 was up 1.6% across the month. Emerging market equities fell after China’s manufacturing PMI data was weaker than expected and recession fears continue to weigh. The FTSE All-World Emerging index closed down 0.9% on the month. 

(All returns are sourced from FactSet and are reported as total return in local currency for the period 31/03/2023 – 30/04/2023).


UK equities rose over the month. Financials were the largest contributor to performance, driven largely by the banking sector, which recovered as fears around the health of US banks receded somewhat. Oil and gas was another top contributor, supported by a recovery in oil prices as Saudi Arabia and other OPEC nations announced a surprise decision to cut oil production (by 3.7%) due to weak global demand amid recession risks. Domestically focused sectors held up despite inflation and wage data continuing to be strong, resulting in a rise in UK interest rate expectations. 


US equities made limited gains in April with large tech names being some of the leading performers. Investors continued to look ahead to the May Federal Reserve decision on whether interest rates would continue to rise in the US. The Fed unanimously voted to raise rates to 5.25% on 3rd May after a two-day meeting approved its 10th interest rate rise in just over a year. Inflation data remains resilient, although the Federal Reserve hinted that the current tightening cycle is nearing its end.  

After the banking distress in March, contagion risks mostly eased through April. Concerns over First Republic Bank re-emerged towards month-end, but they were short-lived as JP Morgan acquired the bank in a government-led deal.
Another developing issue in April was concern around the US debt ceiling and whether Republicans and Democrats could agree on raising it in time to avoid a default. This saw investors move into 1 month Treasury bills (that do not see any debt ceiling default risk). Republicans are looking to rein in spending, while Democrats are seeking an unconditional increase in the debt limit.


European shares made gains in April, supported by the release of some resilient corporate earnings and better than expected growth in services sector output. Top performing sectors included energy and real estate, which have been underperformers so far this year. Semiconductor companies suffered losses amid concerns of a global slowdown in demand. 

G7 leaders in Japan made new commitments into renewable energy 

Energy ministers from the G7 countries have concluded negotiations aiming to “accelerate the phase-out of unabated fossil fuels” to achieve net zero in energy systems by 2050 at the latest. The seven nations made significant new commitments into renewable energy, in particular offshore wind capacity and solar. The focus on renewables comes alongside an ongoing priority to strengthen energy security in response to Russia’s invasion of Ukraine. Despite the strong wording in the negotiations there is no clear deadline for the phase-out of fossil fuels, with investments into gas being permitted “to help address market shortfalls” given the current energy crisis.