The value of the Australian Dollar decreased against major foreign currencies, increasing overseas investment returns when measured in Australian dollar terms. International and Australian fixed interest markets posted negative returns over the month due to rising yields across most maturities.

The ongoing Russia-Ukraine war entered its third month and showed no signs of slowing down in April. The war has entered Phase 2 with Russian Foreign Minister, Sergey Lavrov, stating “another phase of this operation is beginning, and I am sure it will be a very important moment in this entire special operation” [1]. This new phase has seen Russian troops pull back from attacking the capital, Kyiv, (which has managed to hold back Russian forces) and the troops have been redeployed to the Donbas region (in eastern Ukraine) in an effort to control and hold that territory. A key focus of the new phase is the city of Mariupol (which prior to the war had a population of approximately 450,000 Ukrainians). Mariupol is a militarily strategic objective for Russia and if taken would provide a land corridor for Russian troops and weapons to pass from Crimea (in the South) to the Donbas (in the East). Meanwhile, the governments of both Finland and Sweden have indicated they will apply for NATO membership as early as May.

The Australian Bureau of Statistics (ABS) published the latest Australian inflation statistics on 27 April for the quarter ended March 2022. Australia’s annualised Consumer Price Index (CPI) rose 5.1%, the highest reading since 1991 (and since the inflation target mandate was adopted by the RBA in the early ‘90s) [2]. This is the fourth consecutive quarter that year-on-year CPI was at or above the upper band of the RBA’s target range of 2-3%. Notably the reported trimmed-mean CPI measure (a narrower basket of less volatile items) was 3.7%, which also exceeded the RBA inflation target, for the first time since 2010. Whilst not in the timeframe of this commentary, we also note that on 3 May the RBA hiked interest rates by 0.25% in response to rising inflation, the first increase since 2010. In the United States inflation continued to climb with a CPI increase of 8.5% (year-on-year) for the month of March [3]. This was the 12th consecutive month that inflation was higher than inflation expectations (which were 1.9% lower than the reported figure).

There were two-rounds of voting in the French Presidential election in April. The first round was held on 10 April where all candidates were eligible, with the top two vote getters proceeding to a run-off election two weeks later. Incumbent centrist, Emmanuel Macron, topped the first round with 27.9% of the vote, followed by right-wing Marine Le Pen with 23.2% and left-wing Jean-Luc Melenchon narrowly missed the run-off with 22.0%. In a rematch of the 2017 run-off, on 24 April, Macron won with a convincing 58.5% of the vote (although this was a significantly narrower margin than he won with in 2017). Macron’s policies are focused towards an integrated Europe. Macron will serve a second five-year term as President, the first to do so in 20 years, since Jacques Chirac.

Reported global COVID-19 case numbers exceeded 513  million at the end of April 2022 (an increase of 52 million in one month), with cumulative global fatalities exceeding 6.2 million at the end of the month [4]. Daily new cases of infection decreased steadily throughout the month of April, while daily fatalities continued to decrease throughout the month to levels not seen since the pandemic began. Australia has climbed to the 20th position out of all countries in terms of cumulative reported cases of infection. Notably the Chinese government is continuing its “zero-COVID-19” policy with stringent lockdowns imposed on Shanghai and other cities leading to a global slowdown in manufacturing.

Equities

All major foreign equity markets produced negative returns in the month of April, with the exception of the United Kingdom (FTSE 100 Index). Developed markets (excluding Australia) returned -7.4% on a currency-hedged basis (and -3.2% in Australian dollar terms, reflecting the fall in the value of the Australian dollar). The best performing of the major foreign markets was the United Kingdom’s (FTSE 100 Index) returning +0.8% whilst the worst performing stock market was the United States (S&P 500 Index) returning -8.7%. 

The Australian stock market (S&P/ASX 200 Index) generated a return of -0.9% during April, with 7 sectors contributing positive returns. Utilities was the standout performer returning +9.3.% whilst the worst performing sector was Information Technology that returned -10.4%.

From a foreign developed market perspective, only 2 sectors produced a positive return. Consumer Staples and Energy were the strongest performers returning 2.9% and 0.2% respectively. Communication Services, Information Technology and Consumer Discretionary were the lowest performing sectors returning -13.0%, -11.3% and -10.7%.

Bonds

The Australian government bond yield curve shifted upwards in April. The upwards shift resulted in negative Australian fixed interest returns for the month of -1.5% (Bloomberg AusBond Composite Index). The slope of the Australian government bond yield curve flattened substantially in April as the two-year yield increased by 0.6% and the ten-year yield increased by 0.3%. The cash rate set by the RBA remained unchanged at 0.1% throughout April but increased to 0.35% on 3 May.

Over the month of April, major developed global government bond yield curves in general shifted upwards over all durations, with the exception of Japan. Notably, the United States’ two- year and ten-year government bond yields increased the most of all major foreign government bonds, by 0.4% and 0.6% respectively.

Currencies

The Australian Dollar depreciated against all major foreign currencies, with the exception of the Japanese Yen, in April. The Australian Dollar decreased in value against the United States Dollar, Chinese Renminbi, and British Pound by 5.6%, 1.4% and 1.4% respectively, finishing the month at 0.7061 US Dollars, down 4.2 US cents over the month. 

Commodities

The price of WTI oil increased 4.4% and the price of Brent crude oil increased 1.3% over the month as the Russia/Ukraine military conflict continued to disrupt supply chains. The S&P GSCI Commodities index rose by 4.5% for the month of April, with the price of natural gas notably increasing 28.4%. Of the precious metals, the price of gold decreased 2.1% and the price of silver decreased 8.1% in April. 

Performance of key markets over relevant time periods to 30 April 2022

Asset class	Index	Month* (% change)	FYTD* (% change)	1 year* (% change)
Australian Shares	S&P/ASX 200 Acc. Index	-0.9%	5.3%	10.2%
International Shares	MSCI World Ex Aust Unhedged A$	-3.2%	-1.2%	4.7%
International Shares	MSCI World Ex Aust Hedged A$	-7.4%	-4.6%	-1.4%
US Shares	S&P 500 Index	-8.7%	-2.8%	0.2%
UK Shares	FTSE 100 Index	0.8%	10.7%	12.3%
Japanese Shares	Nikkei 225 Index	-3.5%	-5.1%	-5.0%
Australian Listed Property	S&P/ASX 200 A-REIT Index	0.6%	7.2%	15.1%
Australian Fixed Interest	Bloomberg AusBond Composite Index	-1.5%	-8.3%	-7.5%
Australian Cash	Bloomberg AusBond Bank Bill Index	0.0%	0.0%	0.0%
Currency	AUD/USD	-5.6%	-5.8%	-8.5%

*Percentage changes in returns are for periods over the month of April (Month), the financial year 1 July 2021 to 30 April 2022 (FYTD) and for the year 30 April 2021 to 30 April 2022 (1 year). Past performance is not an indication of future performance.

[1] https://www.aljazeera.com/news/2022/4/19/new-phase-of-ukraine-war-as-russia-attacks-east

[2] https://www.rba.gov.au/inflation/measures-cpi.html 

[3] https://tradingeconomics.com/united-states/inflation-cpi#:~:text=Inflation%20Rate%20in%20the%20United%20States%20is%20expected%20to%20be,according%20to%20our%20econometric%20models. 
[4] https://www.worldometers.info/coronavirus/

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