April was one of the most consequential months in recent memory for global investors. The combination of geopolitical shock, energy disruption, central bank ambiguity, and currency turbulence created an environment of extreme volatility, exactly the kind of backdrop that tests investment frameworks to their limits. As we enter May, the landscape remains complex, but the picture is beginning to sharpen. Here is our read on what happened and what to watch over the coming weeks.
Geopolitics: The Iran Conflict Defines the Month
The dominant force shaping every asset class in April was the ongoing US-Israel conflict with Iran, which has been unfolding since late February. The month began with Washington threatening to escalate further unless the Strait of Hormuz was reopened. On 8 April, a temporary ceasefire agreement was reached, sending equities surging and oil plunging significantly in a single session as markets priced in de-escalation.
That optimism proved short-lived. Direct talks held in Islamabad on 11 April lasted just 21 hours and produced no agreement. The core sticking points, Iran’s nuclear enrichment programme and control of the Strait of Hormuz, remain unresolved. In the days that followed, the US imposed a naval blockade on Iranian ports, Iran briefly reopened then re-closed the strait, and Trump cancelled a second round of planned talks in late April. As of the end of the month, the ceasefire technically holds but is widely described as fragile, with US aircraft carriers now stationed in the Middle East.
The humanitarian and economic toll of the conflict is mounting. The IEA has described the Strait of Hormuz as one of the most significant oil supply shocks in recent history, with secondary effects including elevated jet fuel costs, supply chain delays, and inflationary pressure rippling through consumer economies globally.
Energy Markets: Oil’s Wild Ride
Brent crude began April trading near $100 per barrel and experienced extraordinary intraday swings throughout the month. The ceasefire announcement briefly sent prices below $83 before they rebounded sharply as the strait remained closed. By late April, Brent was back above $100 as negotiations stalled and the US naval blockade intensified supply concerns.
For May, energy markets will be the most reliable indicator of geopolitical developments. Any credible progress toward a Hormuz agreement could trigger another sharp downward move in oil prices, while a breakdown of the ceasefire would push prices significantly higher. This binary outcome makes positioning in energy particularly challenging, so it’s important to monitor the situation closely given its direct bearing on inflation expectations and central bank policy.
Equities: Recovery Tempered by Uncertainty
Global equity markets staged a meaningful recovery from their March lows in April, fueled by the early ceasefire announcement, though gains proved uneven and sector-dependent. US markets outperformed due to solid economic data, with the S&P Global Composite PMI rising to a three-month high of 52.0. European indices struggled, with the DAX, CAC 40, and FTSE 100 all closing the month lower as energy costs weighed on consumer confidence and business sentiment. In Asia, the Nikkei outperformed on AI and technology strength, while defensive sectors broadly beat cyclicals across most major markets.
Heading into May, the key question for equities is whether the ceasefire holds and energy prices stabilise. US corporate earnings have so far shown resilience, but forward guidance from energy-intensive sectors will be closely watched as fuel cost pressures feed through to margins. A resolution in the Strait of Hormuz would likely unlock a meaningful relief rally, particularly in European and emerging market equities that have borne more of the brunt. Conversely, any resumption of hostilities could see risk-off positioning accelerate sharply. The rotation into defensives that defined April is likely to persist until there is greater clarity on the geopolitical path, and investors should expect continued volatility around any major diplomatic developments.
Currency Markets: Dollar Softness and Sterling Stability
April saw persistent US dollar softness despite solid economic readings, driven by geopolitical uncertainty, FOMC ambiguity, and ongoing de-dollarisation trends. The key pairs relevant to our fund’s strategy, EUR/USD, GBP/USD, and GBP/JPY, all saw elevated volatility. Sterling held firm around 1.35 against the dollar, while GBP/JPY was sensitive to the BOJ’s decision to hold rates steady with the yen near 159.
For May, currency markets are set to remain highly reactive to geopolitical developments. If the Strait of Hormuz reopens and risk appetite recovers, we would expect the dollar to find firmer footing as safe-haven flows unwind. Sterling could benefit from any positive surprise in UK growth data, though elevated energy import costs remain a headwind. GBP/JPY remains a pair to watch closely given the BOJ’s tentative policy normalisation path and the sensitivity of the yen to risk sentiment.
Gold: From Peak to Pullback
Gold experienced a turbulent April. After hitting an all-time high near $5,595 in late January, the metal endured its worst monthly decline since June 2013 before recovering to around $4,867 by mid-April. The final week brought fresh pressure as stalled negotiations and rising oil prices raised fears of persistently higher interest rates, pushing gold back toward $4,554. The structural bull case, underpinned by central bank buying of approximately 800 tonnes per year, strong ETF inflows, and de-dollarisation, remains intact, but the path higher is clearly not linear.
Looking ahead, gold’s trajectory in May will hinge on two competing forces. On one hand, any diplomatic breakthrough in the Middle East that brings oil prices lower and rate cut expectations back to the table would be supportive for gold over the medium term. On the other hand, if inflation data continues to trend toward the upside and central banks signal rates will stay higher for longer, gold could remain under pressure in the near term despite its long-run appeal as a safe haven asset.
Four Things to Watch in May
Strait of Hormuz negotiations. This is the single most important variable across all asset classes. Any credible reopening agreement would be positive for equities, deflationary for energy, and likely negative for gold in the near term. A breakdown would trigger the reverse. Iran’s Foreign Minister has described an agreement as “just inches away” but has criticised US demands as excessive. Trump, for his part, has stated that Iran can call if it wants to talk. The situation could move quickly in either direction.
Central bank decisions. The Fed is expected to hold rates steady this week, though this may represent Jerome Powell’s final meeting as chair. Markets will scrutinise guidance closely. The ECB and Bank of England decisions will also be in focus, with inflation expectations having risen materially due to energy costs. Any hawkish surprises could rattle bond and equity markets.
US inflation data. With oil supply disrupted and supply chain delays intensifying, April’s inflation readings, due in early May, will be watched carefully. S&P Global noted that input costs and selling prices rose at their fastest pace since mid-2022 in April’s PMI data. A hot print could delay rate cut expectations further.
Eurozone economic momentum. German and French data have been consistently disappointing. May’s data flow will indicate whether Europe is genuinely slowing or whether April’s weakness was conflict-driven and therefore potentially temporary.
DISCLAIMER:
Issued by Trivesta Funds Pty Ltd ACN 627 270 900 (Trivesta Funds), a Corporate Authorised Representative (AR No. 1274820) of Trivesta Capital Ltd ACN 126 975 282, AFSL 320497 (Trivesta Capital). Trivesta Funds is authorised to provide financial services in connection with the Trivesta Protected Yield Fund (Fund). The information on this page is general only and does not take into account your objectives, financial situation or needs, and does not constitute legal, tax, financial or investment advice. The Fund is available only to wholesale clients (including sophisticated investors) under section 761G or 761GA of the Corporations Act 2001 (Cth). Offers to invest in the Fund will only be made via an Information Memorandum (IM) issued by Trivesta Funds. Investment is subject to risks, including capital loss, delays in repayment and loss of income. Past performance is not a reliable indicator of future performance. Returns, income and capital preservation are not guaranteed. Any forward-looking statements in this content are based on assumptions and Trivesta’s current views as of 30 April 2026. They are not guarantees, and actual outcomes may differ. Charts and data shown are provided by their respective third-party providers under the relevant licences. Trade marks and other intellectual property in those tools and data belong to their respective owners. Trivesta Funds does not control, endorse or accept responsibility for the accuracy, completeness, availability or performance of any third-party platform or data, and use of those tools and data is subject to each provider’s own terms. Visit www.trivesta.com.au for further information.
