Cirilium Portfolios monthly commentary - Review of April 2026

US equities delivered a return of 10.5% in US dollar terms in April, supported by a combination of robust earnings and continued investor enthusiasm for AI-related companies. However, due to the weakness of the dollar this translated to a smaller return of 7.2% for sterling-based investors. Technology and communication services stocks led the rally, particularly large companies involved in semiconductors and data infrastructure. These firms benefited from expectations of sustained demand linked to AI investment and digital expansion. Corporate earnings also played an important role. A high proportion of companies exceeded expectations, reinforcing confidence in the economic outlook. Financials and industrials also contributed positively, supported by resilient consumer demand and higher investor risk appetite.

European equities rose by 4.7% during April, supported by improved sentiment early in the month following ceasefire discussions in the Middle East. Investors also responded positively to signs of increased manufacturing activity. Cyclical sectors performed well. Industrials and capital goods companies benefited from stronger manufacturing trends, while banks gained on expectations of higher interest rates and improved profitability. However, performance was uneven across different sectors. Technology hardware companies rose on stronger demand, but software and communication services lagged, reflecting weaker spending and ongoing uncertainty. Despite positive returns overall, the economic backdrop remained weak, with low growth and contracting business activity. Rising energy prices and ongoing uncertainty also continued to weigh on the outlook.

UK equities lagged global markets in April, delivering a more modest return of 2.7%. The UK stock market underperformed other developed markets, reflecting its sector makeup and limited exposure to high-growth technology companies. Performance across sectors was mixed. Banks were a bright spot, benefiting from a supportive interest rate environment and resilient profitability. Technology hardware companies also performed well, supported by global demand linked to AI investment. However, traditionally defensive sectors such as energy, healthcare, and pharmaceuticals lagged. Oil and gas companies also declined due to profit-taking, despite higher oil prices, while investors moved away from defensive areas into growth opportunities. Inflation remained elevated, reinforcing expectations that interest rates may stay higher for longer.

Japanese equities posted solid gains of 5.9% in April, recovering from the weakness seen in March. Market performance was supported by improving sentiment around geopolitical developments and a broader recovery in global risk appetite. AI-related companies again led returns, reflecting strong demand and positive long-term growth expectations. However, Japan’s gains were more moderate compared with other regions, partly due to its lower direct exposure to the global AI supply chain. Domestic factors also influenced performance. The Bank of Japan kept policy unchanged but signalled a more cautious stance on inflation, which helped support financial stocks.

Emerging market equities was the standout performer in April, delivering a return of 11.3% and outperforming developed markets. The rally was driven primarily by Asian markets, particularly Taiwan and South Korea. These countries benefited from their central role in the global AI supply chain. Semiconductor manufacturers and technology exporters saw significant gains, supported by strong earnings and continued investment in data centres and digital infrastructure. However, performance was uneven across regions. Countries with less exposure to AI or greater sensitivity to energy prices delivered more modest returns.

Bond markets experienced a more challenging and volatile month compared with equities. Rising oil prices and ongoing geopolitical tensions led to increased inflation concerns, which in turn pushed bond yields higher. Government bonds struggled as expectations for interest rate cuts were pushed back, and in some cases replaced by expectations of further rate increases. This resulted in negative or muted returns across several major markets. In contrast, corporate bonds performed relatively well. Strong economic conditions and positive investor sentiment supported credit markets, with credit spreads tightening over the month. Higher-yielding segments, including emerging market debt and high-yield bonds, were among the stronger performers.