April saw several familiar themes extend risk-off sentiment in markets. The war in Ukraine sadly continues, China’s COVID outbreak has dampened economic activity in the country, but pretty much everywhere else inflation continues to surge, driven in large part by higher energy costs. This inflation is beginning to be felt acutely in the UK too as the latest round of energy price rises make their way into bills, adding to concerns around consumers’ financial positions and hence their likelihood of continuing to spend to drive the economy. To combat inflation, central banks are in the midst of a tightening cycle, with rhetoric on future interest rates particularly hawkish. This has served to increase bond yields (and thus lower bond prices) as well as weighing on equities in general. ‘Growthier’ equities have been particularly hard hit given more of their anticipated cashflows lie far into the future, a feature that looks less attractive given current uncertainty.

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