March and April market & economy update: what it means for your money

Hello and welcome to your March and April Market Update!

March and April were heavily influenced by global events, particularly the conflict involving the United States, Israel and Iran. The main concern for markets was energy supply, as disruption around the Strait of Hormuz pushed oil and gas prices sharply higher. This created renewed concerns about inflation, interest rates and slower global growth.

March

March was a difficult month for sharemarkets. Global shares fell as investors became more cautious, with rising oil prices creating concerns that inflation could stay higher for longer. This also pushed bond yields higher and placed pressure on interest rate sensitive areas such as property and infrastructure.

In Australia, the Reserve Bank increased interest rates again as inflation pressures remained a concern. While parts of the economy are slowing, the labour market has remained fairly resilient, and higher energy costs could make it harder for inflation to fall quickly. Household spending also showed signs of softening, which suggests many families are feeling the pressure from higher mortgage repayments and cost of living increases.

Despite the uncertainty, the Australian economy was not weak. Growth was better than expected, but markets remained focused on inflation, energy prices and the risk of further rate rises.

April

April was more positive for markets, although conditions remained unsettled. Sharemarkets recovered some of their March losses as investors became more hopeful that the conflict in the Middle East could ease. Oil prices also came back from their highs at times, which helped improve confidence.

However, the recovery was not smooth. Energy prices remained elevated, and inflation concerns continued. In Australia, markets increasingly expected another interest rate rise in May, particularly if inflation remained above the Reserve Bank’s target range.

Global markets were also supported by strong company earnings, especially from technology and AI related businesses. This helped US shares recover strongly, while Australian shares also improved after a weaker March. Even so, geopolitical risks and higher energy costs remained key concerns.

What it meant for investors

March and April were a reminder that markets can move quickly when global events change. Higher oil and energy prices can affect inflation, household budgets, company costs and interest rate expectations. This can create short term volatility, even when the longer term investment outlook remains positive.

The rebound in April also showed why it is important not to react too quickly during periods of market stress. Investors who sell during sharp falls can miss the recovery when sentiment improves.

What to expect in the months ahead

Shares - Markets may remain choppy while investors assess the impact of higher energy prices, inflation and interest rates. However, company earnings remain supportive in some areas, particularly technology, resources and parts of the Australian market.

Interest rates and the economy - Inflation remains the key issue. If energy prices stay high or inflation does not fall quickly enough, interest rates may stay higher for longer. This would continue to affect borrowers and interest rate sensitive investments.

Global events - The Middle East remains a major focus. If tensions ease, markets may respond positively. If energy supply is disrupted again, this could place renewed pressure on inflation and markets.

For most long term investors, the key message remains the same: do not stress about short term market movements. Markets will always go through periods of uncertainty, but staying diversified, sticking to your plan and focusing on your long term goals generally leads to better outcomes.

This update is general in nature and does not take your personal situation into account. If you would like to chat about how these trends relate to your own plan, I am always here to help.

If you have any questions or concerns, please reach out at any time.

Warmest regards Josh