Market Overview

Markets have continued to deliver returns, but the investment environment has become more demanding. While global markets remained resilient in April, supported by strong company earnings in the US and some easing in geopolitical tensions, conditions are becoming more selective. Higher oil prices and rising bond yields are adding pressure, particularly through their impact on inflation.

The broad gains seen earlier in the cycle have given way to a more measured environment, where outcomes depend much more on careful investment selection rather than simply taking on more risk. Income opportunities still exist, but there is less room for error as inflation pressures persist and interest rates are likely to stay higher for longer.

A More Constrained Market Environment

Markets remain stable and continue to function well, with access to liquidity and capital still available. However, the backdrop is becoming more constrained. Oil prices reached around US$126 per barrel during April, reinforcing global inflation pressures and limiting how much central banks can support growth.

At the same time, economic data, particularly from the United States, has been stronger than expected, which has helped markets absorb these pressures. This combination of resilience and constraint means that opportunities still exist, but they increasingly favour stronger, more resilient companies with solid balance sheets.