Monthly Report April 2026

The equity markets recovered significantly in April, with US-heavy indices reaching new all-time highs. Alongside a temporary ceasefire in the Iran war, strong earnings growth among US companies, driven by the AI boom, contributed to a calming of the markets. Over the course of the month, the Swiss Performance Index (SPI) gained 4.0% and Germany’s DAX rose by 7.1% in EUR, while the S&P 500, the MSCI World and the emerging markets index MSCI Emerging Markets climbed by 10.5%, 9.6% and 14.7% respectively in USD. After a temporary dip to USD 90, oil prices rose again to well above the USD 100 mark, while the gold price moved sideways and long-term interest rates remained at elevated levels.

Central banks leave key interest rates unchanged

At the end of April, the European Central Bank (ECB) and the US Federal Reserve (Fed) decided to leave their key interest rates unchanged. The US economy in particular has so far proved largely resilient to the effects of the Iran war.

The longer the Strait of Hormuz remains blocked, the greater the inflationary pressure caused by high commodity prices will become, limiting the room for manoeuvre of central banks. This is the first major challenge for designated new Fed Chair Kevin Warsh. Given the current situation, interest rate cuts are hardly justifiable for the time being, meaning that tensions between the White House and the Federal Reserve are likely to persist.

Surprisingly, Jerome Powell has announced that he will remain on the Board of Governors as a regular member after the end of his term as Fed Chair. He left open whether he will serve out his remaining term until the end of January 2028. The last Chair to remain on the Board after his term ended was Marriner S. Eccles in 1948. Powell explained his decision with the words: “I had long planned to retire. But, you know, the events of the last three months have, I think, left me with no choice but to stay.”

Inflation has recently risen to 3.3% in the US and to 3.0% in the eurozone. While financial markets currently expect no changes to the Fed’s key interest rates this year, the ECB is expected to raise rates two to three times by 0.25% each. However, past experience has shown that the ECB has repeatedly refrained from potential rate hikes.

Fund and mandate performance

Format’s investment solutions benefited from the general market recovery in April and posted significant gains, outperforming their benchmarks. Format Aktien Schweiz mittlere und kleinere Firmen recorded the strongest increase at 8.4%, clearly outperforming its benchmark, the SPI Extra. The performance of the funds and mandates since the beginning of the year can be accessed via the following link.

Outlook: Complex environment with opposing forces

International financial markets are currently facing a complex environment shaped by opposing forces.

On the one hand, the ongoing conflict in the Middle East has led to high energy prices, rising prices and increasing supply shortages for various commodities. This is weighing on growth, fuelling inflation and pushing expected interest rate cuts, for example in the US, further back on the timeline.

On the other hand, mostly strong corporate earnings growth, for example in the US, emerging markets and Switzerland, together with the AI boom, is supporting equity prices. Even if this is not yet clearly visible to many people in everyday life, artificial intelligence is one of the major technological developments that will transform numerous industries and has triggered one of the largest investment waves in history. This investment boom is by no means limited to American companies; numerous companies worldwide are benefiting from it, including a number of Swiss companies whose shares we hold in the Format portfolios.

Whether the negative developments - elevated prices and increasing commodity supply shortages, or the positive developments, corporate earnings and the AI investment boom, prevail will be decisive for the future development of equity markets.

Best regards,
Matthias Hug and Markus Lackner

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