Sentiment was supported by a US-Iran ceasefire, which helped alleviate concerns around supply chain disruption and input cost pressures. While a more durable agreement has yet to materialise, the ceasefire and its subsequent extension were enough to meaningfully lift risk appetite across financial markets. 

Asian emerging market equities were the main driver of April’s gains, with AI-related tailwinds outweighing concerns around energy prices. South Korea was the standout performer, surging 38.2% to record highs as sentiment reversed sharply from the March sell-off. Strong earnings across the AI supply chain, positive guidance from major US technology companies, and the improved geopolitical backdrop all contributed to the exceptional rally. Taiwan also performed strongly, gaining 26.2%, supported by robust first-quarter earnings from AI-related companies and upgraded capital expenditure guidance from leading US cloud providers. This reaffirmed the island’s central role in the global semiconductor ecosystem.  

India, while positive in absolute terms, lagged regional peers. Its large IT services sector continued to face questions around AI-driven disruption, while elevated oil prices and stretched valuations weighed on relative performance. Indonesia was the weakest market in the following MSCI’s decision to extend its market reform review until June 2026, pushing back the possibility of any reclassification to frontier market status. 

Chinese equities delivered a muted performance. The market has limited direct exposure to the AI hardware cycle that drove gains elsewhere, while domestic investors remained cautious about the broader impact of elevated oil prices. The People’s Bank of China held benchmark lending rates steady at record lows, while policymakers signalled a meaningful fiscal expansion through accelerated bond issuance including ultra-long special treasury bonds. 

Outside Asia, performance was mixed. Hungary was a notable outperformer, delivering double-digit returns after the Tisza party’s decisive election victory ended Viktor Orbán’s 16-year tenure. This raised expectations of EU fund disbursements and constitutional reform. Romania, by contrast, came under pressure amid political instability following the collapse of the government. South Africa lagged as persistent oil price concerns reignited inflation fears, while Saudi Arabian equities declined against a backdrop of restrained output and lingering regional risk. In Latin America, markets advanced on improved global sentiment and commodity exposure, although gains were more measured than in EM Asia.  

On the macroeconomic front, EM central banks broadly followed a cautious path, though Brazil trimmed its Selic rate by 25 basis points to 14.50% while the Philippines delivered its first rate hike in over two years, raising its policy rate by 25 basis points to 4.50%. Fiscal dynamics remained divergent across EM, with Latin America constrained by elevated borrowing costs, while EM Europe continued to grapple with election-driven spending pressures and the slow progression of fiscal consolidation.