Market and Economic Commentary: April 2026

Technology is dead, long live technology!

General Sherman may have pronounced that “war is hell” but after going through hell in March reacting to every snippet of war news, the markets decided to ignore the constantly changing headlines to follow their own path in April. That path was higher and it was driven by a resurgence in technology stocks, particularly those related to semiconductors and memory. Intel (+114%), AMD (+74%), Micron (+53%), Texas Instruments (+45%), Qualcomm (+39.4%) and Broadcom (+35%) led the way in April. We witnessed the return of the Magnificent Seven, with all seven stocks posting gains and with Alphabet (+34%) and Amazon (+27%) setting the pace. Even software stocks had a reprieve after being out of favour for the past three months. When April was concluded, the Nasdaq (+15%) had posted its best month since April 2020 and the S&P 500 (+10%) had posted its best month since November 2020 (see the gold line of the S&P 500 in the chart of the past year below). Communication Services (+18%), where Alphabet (+33%) resides, outperformed the overall S&P 500 index in April, along with the Technology (+17%) and Consumer Discretionary (+18%) sectors. Real Estate (+9%), Industrials (+8%), Financials (+5%), Consumer Staples (+3%), Materials (+3%) and Utilities (+2%) all recorded positive gains in the month but underperformed the index. The Healthcare (-1%) and Energy (-4%) sectors were the laggards and posted negative returns in the month.

Algorithmic computer trading was seen as a catalyst (early in the month) for the strong market gains, with large short equity positions being traded very quickly into large net long equity positions. A strong first quarter earnings season from the S&P 500 companies provided an additional tailwind that drive the markets higher. Outside of equites, however, other markets did not reflect that same enthusiasm. Two-year US Treasury yields rose 10 basis points, while the 10-year yield rose seven basis points. The gold price was relatively flat around $4,600/oz, iron ore held at around $107/oz and platinum had only a fractional gain of 1.5% to $1,979/oz. The brent crude oil price gave up around $3/bbl in April with the US dollar giving up around one cent to the euro to close at $1.17/€. The US Federal Reserve Bank left the target of the Fed Funds rate unchanged at 3.75% (upper bound), even as US consumer price inflation jumped from 2.4% to 3.3% for the month of March. The Federal Reserve Bank’s Open Market Committee more often than not comes to a unanimous decision on policy but every now and again there is the odd dissenting voter. At the April meeting, however, there were four dissenting voters, the most on record since 1992. That outcome highlights the uncertainty on rates going forward, with higher oil prices driving inflation higher. Policy makers around the world have indicated that tightening policy on the back of an extraneous price movement is ineffectual and that they will only respond to any second round price inflation that might materialise. At this point, the US interest rate markets are pricing in no change to interest rates this year.

Excitement on the JSE in April was more muted, with the benchmark FTSE/JSE All Share index following the S&P 500 higher over the first part of the month but then parting ways and falling back somewhat over the latter part of the month (see the black line of the index in the chart of the past year below). While technology boosted the American market, the resources-heavy JSE slipped back as the precious metals markets stagnated. Over the course of April, the Resources sector lost 2.4%, while Financials (+2.8%) and Industrials (+2.3%) advanced modestly. For the year-to-date (“YTD”) that left Industrials flat, Financials down almost 2% and Resources up almost 4%. Traditional mining houses Anglo American (+13%) and BHP Billiton (+9%) had a good month, while other notable gainers included Richemont (+7%), Investec plc (+9.6%) and MTN (+7%). The beleaguered Naspers and Prosus both gained just over 4% in the month but Naspers (-19%) and Prosus (-22%) remain amongst the biggest losers on the JSE this year (see the table of gainers and losers in the appendix below). The losers list remains littered with companies more closely tied to the health of the South African economy: Spar (-32%), Clicks (-22%), Pick n Pay (-21%), Tiger Brands (-21%), Foschini (-17%), Sanlam (-13%) and Mr Price (-11%). The biggest winners this year continue to be the energy-related stocks with Sasol (+117%) and Thungela (+51%) topping that list.

FTSE/JSE All Share index (black, LHS) and S&P 500 (gold, RHS): One year (daily)

Technology earnings ramp up the averages

 By the end of April, 63% of S&P 500 companies had reported earnings and the earnings surprises that they provided were overwhelmingly positive. Of the companies that reported, 84% reported earnings per share above market estimates (by an average 21%), while 81% reported revenue above market expectations. Of the market’s 11 sectors, nine reported year-on-year earnings growth for the quarter (seven with double-digit growth), while two sectors (Health Care and Energy) reported declining earnings against the same quarter last year. Communication Services (+53.2%), Information Technology (+50%), Consumer Discretionary (+39%) and Materials (+35%) reported earnings growth above that of the S&P 500‘s 27%. Alphabet’s 22% growth in revenue and 82% growth in earnings per share were a healthy contributor to the market’s revenue and earnings growth, although Alphabet’s bottom-line earnings were distorted by a mark-to-market gain in non-marketable securities. Nevertheless, the 27.1% year-on-year earnings growth for the quarter (a blend of reported earnings from the 63% of companies and estimates for the remaining 37%), if sustained, would be the highest growth rate reported for the S&P 500 since the 32% reported for the fourth quarter of 2021. Current market estimates (FACTSET) are for earnings growth of 21.3% for quarter two, 23.0% for quarter three and 20.6% for quarter four. For the full 2026 calendar year, earnings growth of 21.3% is expected for the index. The strong earnings growth continues to provide a solid fundamental underpin to markets and a welcome distraction from the constantly changing state of affairs in the Strait of Hormuz.

The equity markets may be ignoring the war stories for now but the longer the war carries on, the more its impact is going to be felt. Higher fuel prices are already impacting consumers directly as they travel in planes, trains and automobiles and indirectly, as higher production costs are passed on to consumers via higher prices. Central banks have held back on acting against the first round impacts on inflation of supply shocks but are more ready to act on second round inflation effects and any deterioration in inflation expectations. That holds for the South African Reserve Bank as much as it does for the Federal Reserve or the Bank of England. The policy response of higher interest rates would hurt consumption expenditure and would be a headwind for investment. Higher rates would not be welcomed by the equity market or the fixed income markets. It’s in everyone’s interest for the war to end. Quite apart from the tragic loss of life and limb and life-sustaining infrastructure on the front line, sustained shortages in fuel, gas, fertiliser and chemicals would have dire consequences for livelihoods and lives. The parties tell us that they are talking but the urgency is not just to negotiate but to secure a lasting peace that prevents further human and economic devastation.

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