Market Update - April 2023



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April was a more subdued month for Global Markets after a whip-sawing month in March. Banking concerns eased and economic data was broadly in line with expectations. The S&P 500 ended 1.5% higher, and US 10yr interest rates decreased modestly to 3.42%.  

Concerns of a wider banking crisis during March dissipated in April, which helped equity markets hold their gains across the month. US CPI data showed that inflation slowed from 6% to 5% on an annual basis, but core inflation remains sticky.  

The UK continued to report higher-than-expected inflation, above 10%. Although the Bank of England (BOE) anticipates that price increases will ease over time, persistent inflation suggests that further rate rises may be needed. The market expects the BOE to hike another 0.25% at their meeting in May.  

The Reserve Bank of Australia (RBA) paused their interest rate hikes in April, leaving the cash rate unchanged at 3.6%, as widely expected by the markets. The RBA’s pause is intended to provide additional time to assess how recent interest rate increases are impacting the economy. Australia’s CPI inflation for the first quarter was above expectations at 7%, indicating that the RBA may continue raising interest rates again soon. 


In New Zealand, the RBNZ surprised investors by increasing the OCR a further 0.5% to 5.25%, which was more than the 0.25% expected by the market. The RBNZ noted they still have work to do to get inflation down and that they were uncomfortable with longer-term interest rates moving lower. By hiking 0.5%, the RBNZ signaled that interest rates could be higher for longer.  

NZ’s inflation slowed to 6.7% in April, lower than the 6.9% and 7.3% expected by the market and RBNZ respectively. Services and non-tradables inflation remained elevated and exhibited little signs of easing.  

Consequently, markets expect the RBNZ to hike a further 0.25% in May. Investors will be watching the RBNZ’s forecasts and messages closely to ascertain the extent of any potential future interest rate hikes from here. NZ interest rate markets remain in a holding pattern for now with the 2yr interest rate ending the month just 0.03% higher, and 5yr rates 0.12% lower. The NZD fell 1.2% against the USD over the month. 

Markets are cautiously optimistic that the global economy can achieve a soft-landing with the end of central bank tightening in sight. However, both a sustained drop in inflation and the full effects of higher interest rates on the economy, are yet to be seen.