Investment environment overview 04/2026

April will likely be remembered as a month of paradox, where a negatively fluid geopolitical environment, highly volatile energy prices and inflation expectations were seemingly overshadowed by the sheer gravitational pull of Q1 earnings season and consequently the AI hardware supercycle. Global equity markets exhibited a level of euphoria that defied major risk-off signals throughout the month. The S&P 500 surged past the 7,000 milestone, rallying more than 10% in April alone. However, the true star of the month was the Nasdaq Composite, which eclipsed 25,000 at the end of the month with a more than 15% monthly gain and the best performance since April 2020, as gains continue to be concentrated in the tech sector. In Europe, the narrative remained one of cautious optimism. The STOXX 600 delivered a near 5% advance with its best performance since January 2025. Technology (+13.9%) and Banks (+10.1%) were top gainers amid largely successful earnings results, with Q1 earnings for companies in the index expected to rise 6.9%. The index remains anchored by structural slowdowns, however still remains attractive compared to U.S. counterparts, with a forward P/E in the mid 14x range.

ECB and the Fed did not change rates during their April meetings and maintained a “wait-and-see” approach, waiting for more data on inflation. Despite this pause, fixed income markets have begun to decouple from official guidance, pricing in higher rates for the future. As volatility begins to stir, there is a growing sense that a catalyst is approaching which will break the current inertia and dictate the next major move for global bond prices.

On track for another blowout earnings season

Midway through Q1 earnings, with more than 60% of S&P 500 companies already reporting results, everything points to AI speculation giving way to evidence of real monetization. The earnings growth rate for the index surged to 27.1% YoY, the highest since 2021, led by Communication Services (+53.2%) and Information Technology (+50.0%). Growth continues to be entirely concentrated in the Mag7 whose collective earnings growth rate jumped to an impressive 61.0% YoY. However, scrutiny is needed as massive EPS surprises from Alphabet (90%), Amazon (70%), and Meta (56%) were heavily influenced by one-time GAAP items, such as Alphabet’s USD 37.7b investment gain and Amazon’s USD 16.8b Anthropic gain.

Stock performance largely reflected a market “priced for perfection”. While Alphabet rallied 10% toward a USD 5t market cap and Apple gained 5%, other titans fared worse after earnings announcements. Meta fell 9% post earnings and Microsoft slipped 4% as aggressive CapEx guidance was not taken well by investors, while Amazon remained broadly unchanged. The market continues to demand proof of sustainable margin expansion amidst rising CapEx.

Tasty kimchi stocks

The South Korean KOSPI continued to set fresh all-time highs in April, surging 23%, with the advance driven predominantly by a narrow group of large cap tech names. The main engine remains semiconductor manufacturers: Samsung (passing USD 1t market cap) and SK hynix rallied sharply (32% and 59% respectively) on expectations that AI related hardware demand will sustain memory pricing and earnings momentum, while their outsized weight in the index means their performance has had an unusually strong influence with both names representing about a 40% weight in the index.

Foreign inflows have also been an important driver, and recent export data has reinforced the view that Korea is still benefiting from a powerful tech upcycle. In that sense, the rally reflects not only stronger sentiment, but also a re-rating of Korea’s role in the global AI supply chain. In March, South Korea’s exports rose 48.3% YoY, with semiconductor exports jumping 151.4% to a record USD 33b, or nearly 40% of monthly exports. Beyond semiconductors, the rally has also broadened into defense, selected industrial and infrastructure names.

Volatile commodities as greenback remains weak

Commodity markets remain volatile, but both precious metals and energy continue to offer opportunities. Precious metals have seen sharp swings with limited directional progress, and we still expect a broader consolidation phase over time. As a result, we are reducing long exposure, while keeping room to rebuild positions at better levels. In energy, oil has reached our target area, so we are trimming longs for now, although we still see meaningful upside over the longer term. Natural gas remains relatively inexpensive, so we continue to hold that position. For the USD, the key level remains 101 on the dollar index: as long as it stays below this level, we remain cautious on the USD. A break above 1.1850 in EUR/USD would strengthen our confidence in the EUR and support adding to longs.