Market Update April 2021

Global equity markets performed strongly in April as fiscal support from governments and monetary policy from central banks remained accommodative while economies reopened.

The value of the Australian Dollar fluctuated against other currencies, but was particularly strong against the US Dollar, which decreased the returns of US investments when measured in Australian dollar terms. Global investment grade credit spreads contracted slightly over the month (i.e. the market’s perceived risk of lending to high quality companies decreased).

In April, the International Monetary Fund (IMF) revised its expected real global GDP growth rate in 2021 upward by 0.5%, to 6%, the highest in over 40 years. However, the IMF qualified the revision by stating there was high variability to the estimate and noted there were significant risks to many countries recovering from the COVID-19 pandemic. The IMF also estimated the unemployment rate in advanced economies to be currently 6.2% which, with the exception of 2020, is the highest it has been since 2016 [1].

The Reserve Bank of Australia (RBA) Board met on 6 April to discuss the outlook for the economy and to assess its policy positions. It was noted that Australia had experienced a bounce back in employment and participation rate that was significantly better than the global average, with levels currently higher than in 2019 (before the COVID-19 pandemic). The financial stability of Australian banks (both large and small) in general remains resilient with high levels of capital reserves, high liquid asset holdings, and no notable decrease in lending standards. The RBA reaffirmed its existing policy settings, most notable of which is to target a yield of 0.1% for Government bonds out to a duration of 3 years [2].

Since the passing of the US$1.9 trillion American Rescue Plan Act in March, President Biden and the Democratic party have started releasing parts of their proposed infrastructure and green investment plan initiatives. Importantly, The American Jobs Plan aims to create jobs and improve infrastructure throughout the country by upgrading roads and bridges, while the American Families Plan targets education (through certain subsidies on university fees), healthcare (through tax credits on healthcare premiums) and tax increases on the highest income earners. 

It’s unknown whether the next round of stimulus will pass in two separate bills, but it is likely to be in the combined range of US$3 trillion - $4 trillion. While there is some pushback from more moderate democrats on the spending side, the major contention appears to be over how the infrastructure initiatives will be financed, with some opposing the proposed rise in corporate tax rates from 21% to 28% and suggesting 25% is more appropriate. With the slimmest margin possible in the Senate and a generally obstructionist Republican party, it is likely the specifics of this major legislative reform will be modified from its currently proposed form.


Reported global coronavirus case numbers exceeded 151 million at the end of April 2021, with a total of over 3.1 million fatalities [3]. Reported global daily new cases of infection reached a new all-time peak of 904,000 (surpassing the previous peak set in early January 2021) and continue to be on an upwards trajectory. Nine of the top 20 countries by total reported cases of infection saw new peaks in daily cases, with India experiencing the most dramatic increases.

The two major viral vector vaccines used in the developed world, AstraZeneca and Johnson & Johnson, were both associated with very small proportions of patients experiencing blood clots. This led some Governments, including Australia’s, to suspend or place age limits on who can receive those vaccines. As at the end of April, Australia has administered 2.2 million vaccine doses.

Australia saw its first casualty for 2021 from COVID-19 in mid-April, bringing the total fatalities to 910 since the pandemic began. Australian state governments continue to call snap lockdowns on major cities to combat outbreaks of COVID-19. Perth was the most recent state capital to be locked down, occurring at the end of April and lasting for 3 days.


Major foreign equity markets produced strong positive results throughout April. Developed markets (excluding Australia) returned 4.0% on a currency-hedged basis (and 3.2% in Australian dollar terms), outperforming emerging markets which returned 1.6% in local currency terms. Of the major markets, the best performer was the United States (S&P 500 Index) which returned 5.3% for the month.

The Australian stock market (S&P/ASX 200 Index) generated a return of 3.5% during April, with 8 out of 11 sectors contributing positive returns. Information Technology, Materials and Industrials were the top performers returning 9.7%, 6.8% and 4.3% respectively. Energy, Consumer Staples and Utilities were the worst performing sectors returning -4.9%, -2.5% and -1.2% respectively.

From a foreign developed market perspective all sectors bar one produced positive returns. Communication Services, Information Technology and Consumer Discretionary were the top performers returning 6.6%, 5.2% and 4.6% respectively. Energy was the sole sector to not produce a positive result, with a return of -0.4%.


The Australian government bond yield curve flattened somewhat throughout April with the two-year yield decreasing by 0.006% and the ten-year yield decreasing by 0.04%. The cash rate set by the RBA remained unchanged at 0.1% in April.

Major developed global government bond yields were relatively flat over the two-year term, with the exception of the Chinese and United Kingdom which decreased by 0.096% and 0.024% respectively. Over the ten-year term, the United States and European government bonds were the two major movers. The United States ten-year yield decreased by 0.115% and the European ten-year yield increased by 0.090% over the month of April.


The Australian dollar produced mixed results against major currencies. It increased by 1.6% and 1.3% against the United States Dollar and the British Pound respectively and fell by 1.8% and 1.0% against the Swiss Franc and the European Euro respectively.

The Australian Dollar finished the month at 0.7716 US Dollars, up 1.2 US cents over the month. 


WTI oil rose 7.5% and the price of Brent crude oil increased 5.8% over the month due to increased global demand from reopening economies. The S&P GSCI Industrial Metals index increased 9.8% on average, with copper the strongest performer, rising 12.1%. Of the precious metals, the price of gold increased 3.6% and the price of silver rose by 6.1% in April. 

Performance of key markets over relevant time periods to 30 April 2021

Asset class Index Month* (% change) FYTD* (% change) 1 year* (% change)
Australian Shares S&P/ASX 200 Acc. Index 3.5% 22.1% 30.8%
International Shares MSCI World Ex Aust Unhedged A$ 3.2% 20.3% 23.0%
International Shares MSCI World Ex Aust Hedged A$ 4.0% 31.3% 40.6%
US Shares S&P 500 Index 5.3% 36.6% 46.0%
UK Shares FTSE 100 Index 4.1% 16.3% 22.2%
Japanese Shares Nikkei 225 Index -1.3% 31.1% 44.9%
Australian Listed Property S&P/ASX 200 A-REIT Index 2.9% 24.1% 30.9%
Australian Fixed Interest Bloomberg AusBond Composite Index 0.6% -1.8% -1.2%
Australian Cash Bloomberg AusBond Bank Bill Index 0.0% 0.1% 0.1%
Currency AUD/USD 1.6% 11.8% 18.5%

*Percentage change in returns are for periods over the month of April (Month), the financial year 1 July 2020 to 30 April 2021 (FYTD) and for the year 1 May 2020 to 30 April 2021 (1 year). Past performance is not an indication of future performance.


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