Markets have had plenty to digest over the past few months, with geopolitics, artificial intelligence, and central bank policy all competing for the headlines. After a difficult March, April delivered a strong rebound, even as the underlying risks remain firmly in play.

Tensions between the US and Iran have continued to drive market sentiment, with the Strait of Hormuz, a crucial shipping route for global oil supply, severely disrupted. Oil prices have been volatile throughout, trading in a wide range above US$90 per barrel, driven by news flow and comments from President Trump. The impact of the war remains concentrated in energy supply, shipping capacity, and the cost of moving goods, with flow-on effects rippling into transport, freight, and household essentials, keeping inflation concerns front of mind.

Global equities reflected this anxiety in March, falling sharply as the escalating conflict and closure of the Strait of Hormuz delivered a meaningful oil shock. April, however, saw a sharp reversal. Markets looked through the geopolitical turbulence to reach new highs, with global equities staging a strong rally driven by a rotation back into AI stocks. The US S&P 500 index rose 10.4%, its biggest monthly gain since November 2020, while the technology dominated Nasdaq index added 15.3%. The emerging markets region was a standout, powered by extraordinary gains in Taiwan and South Korea as global AI supply chain leaders.

AI remains central to the narrative around earnings and productivity gains. Microsoft’s CEO recently noted that AI now writes 20–30% of the firm’s internal code, a striking example of the efficiency gains this technology is delivering. Over the medium term, AI should support higher productivity and lower inflation pressure, with value shifting away from labour-intensive models toward businesses with scale and proprietary data. Public opinion, however, remains more cautious than markets, with Pew Research showing Americans more concerned than excited about AI’s societal impact. Adoption is likely to be shaped as much by regulation, energy constraints, and social acceptance as by the technology itself.

This dynamic was reinforced during what some have dubbed the “two-minute earnings season”, when Alphabet, Meta, Amazon, and Microsoft all reported results within a two-minute window. All four companies beat on earnings and revenue, though the market response was uneven, Alphabet’s AI spending appears to be paying off, while Meta is lagging. Collectively, the five largest US tech companies have committed roughly US$630 billion in AI infrastructure spending for 2026, larger than the GDP of most countries. Forecasts expect 12% year-on-year earnings growth for the S&P 500 index this quarter, with the information technology sector contributing 87% of that growth.

In deal news, Elon Musk’s SpaceX has filed for an IPO targeting a June listing at a reported valuation in excess of US$2 trillion, while OpenAI and Anthropic are said to be sounding out investors for potential listings of their own later this year.

Central banks remain in a tricky position. The US Federal Reserve (Fed) held rates steady at its recent meeting, though four of twelve members dissented. This will likely mark the final meeting chaired by Jerome Powell, with Kevin Warsh’s Fed Chair nomination clearing a Senate panel last month. The common message globally across central banks is that maintaining inflation credibility will likely require accepting weaker growth outcomes.

In New Zealand, the Reserve Bank held the Official Cash Rate (OCR) at 2.25%, signalling it has time to assess the impact of the Iran war on inflation. Consumer confidence dropped sharply in April, unsurprising given petrol prices have risen roughly 30% over the past year. The market is now pricing the OCR at 3.10% by December, with the first hike anticipated for the July meeting.

Regional divergence is becoming more pronounced. The US looks better insulated given its domestic energy production, while parts of Europe and Asia face a sharper growth–inflation trade-off. Overall, the environment points to ongoing volatility rather than a return to benign conditions, growth is slowing but not collapsing, inflation risks remain two-sided, and policy flexibility is constrained. In this setting, diversification across asset classes and regions remains critical.