Sustainable Opportunities Funds: Progress amid uncertainty: navigating recent markets

April saw equity markets make progress overall with many global indices recouping ground lost in March. Volatility remains though, with developments in the Middle East continuing to be a key focus. During the month, positive signs around ceasefire discussions helped lift confidence and triggered short lived market rallies. However, renewed tensions served as a reminder that risks remain, particularly the threat of supply chain disruption across critical parts of the global economy.

The Strait of Hormuz, a vital shipping channel through which 20% of global oil and gas supplies once passed through, remains effectively shut because of the conflict. This not only impacts global energy supplies but also sectors such as industrials and semiconductors. Take industrials, these companies are often exposed when shipping routes and access to key inputs are disrupted. Delays to component deliveries can slow production and increase costs. In response, companies may need to hold higher levels of inventory or develop new supply chains. While these measures can be costly in the short term, they can improve resilience in the long term. To understand how delays in the Strait of Hormuz may affect the sectors we invest in, please refer to our analysts' insights.

Bond markets had a more muted month. Concerns over an inflationary shock being unleashed by the war in the Middle East were, to a degree, counterbalanced by the conflict's potential impact on global growth. For now, economic data has been generally encouraging. In the UK, growth figures surprised on the upside, suggesting the economy is holding up better than feared. In the United States, data continues to point to steady activity, supporting the view that growth is slowing gradually rather than coming to an abrupt stop.