Despite continued volatility stemming from tensions between the US and Iran, April proved to be a month of meaningful recovery for global equity markets. Investors moved beyond a challenging March and welcomed a combination of strong corporate earnings, resilient economic data and tentative de-escalation efforts in the Middle East.
While concerns surrounding inflation and elevated oil prices remained present, investor risk appetite returned, particularly within the US technology sector, helping major indices reach new all-time highs. Against this backdrop, the OCM portfolios delivered a strong month of performance and recovered the majority of the drawdown experienced during March’s period of heightened market turbulence.
Easing Tensions in the Middle East
Relations between the US and Iran continued to fluctuate throughout April. However, there has been a gradual improvement in both sides’ willingness to pursue negotiations aimed at ending the disruption to energy markets and restoring stability to global supply chains.
The month saw several developments, including temporary ceasefire agreements, direct talks between the two nations and continued diplomatic engagement through international mediators. While negotiations remain complex and progress has at times been uneven, the overall direction has been more constructive than markets had feared at the start of the month.
Most notably, reports that the US has submitted a formal proposal aimed at ending the conflict and gradually reopening the Strait of Hormuz were viewed positively by investors. Although uncertainty remains elevated, recent developments represent an encouraging step towards de-escalation, helping energy prices ease and supporting the recovery in global equity markets.
Earnings Momentum Supports Risk Appetite
Away from geopolitics, investor attention shifted towards the US first-quarter earnings season, which has provided a strong reaffirmation of corporate resilience.
The blended earnings growth rate for the quarter currently stands at 15.1%, exceeding expectations and putting the US market on track for a sixth consecutive quarter of double-digit year-on-year earnings growth. Importantly, the strength of results has been broad-based, with a significant majority of companies surpassing both earnings and revenue forecasts.
Technology companies remained firmly in focus, particularly as investors continued to assess whether substantial investment into artificial intelligence could translate into sustainable earnings growth. Thus far, results have largely validated these expectations, with several major technology firms delivering strong earnings surprises and supporting positive market sentiment.
While investors continue to scrutinise future spending plans and valuations across the sector, earnings momentum remained a key driver of market performance throughout April.
Performance and Portfolio Positioning
Portfolio performance this month reflected a particularly strong period for global risk assets. Despite holding elevated cash levels at the beginning of April, the OBI portfolios benefitted from a tactical overweight allocation towards Asian and Japanese equities, while newly added global equity positions also contributed positively following their inclusion.
As expected, the Long Hold Growth portfolio range experienced the strongest gains, reflecting its greater exposure to growth-oriented assets, particularly within the US technology sector.
Bond markets remained a source of volatility as investors reassessed the outlook for central bank policy against a backdrop of persistent inflation concerns. This led to the Cautious Income portfolio lagging its peers over the month. Nevertheless, actively managed strategic bond holdings continued to play an important stabilising role across the portfolio range, with fixed income assets still making a positive overall contribution.
Looking ahead, we remain confident in the positioning of the portfolios. While geopolitical and inflationary risks continue to warrant close monitoring, improving market fundamentals and resilient corporate earnings provide a supportive backdrop for long-term investors.
Past performance cannot be used as a guide to future performance and the value of your investment will fall as well as rise in value. You may not get back all your investment and the final value of your investment will depend on the performance of your portfolio. The actual performance of an individual client’s portfolio may differ due to different funds being used and being restricted in relation to certain asset allocations. Performance figures quoted include fund manager charges but exclude adviser, discretionary, custodian and switch charges. Unless stated, income is reinvested into the portfolio. The information contained in in this document is for information purposes only. It does not constitute advice or a recommendation or an offer or solicitation for investment. OCM Wealth Management Limited is authorised and regulated by the Financial Conduct Authority (FCA Registration No: 418826) OCM Asset Management is a trading name of OCM Wealth Management Limited
