Market overview: Fragile recovery on the financial markets

The bond markets remain in negative territory on an annual basis. Yields on government bonds are currently just under 20 basis points higher than at the start of the war.

Indexed performance of government bonds in local currency

100 = 01.01.2026

The war in the Middle East continues to have a major impact on the bond markets. At the start of the year, the markets still expected interest rates to fall in most industrialized countries. However, concerns over sharply rising inflation due to higher energy prices have now taken hold. Market participants in Europe, for example, expect two interest rate hikes this year. While the equity markets recovered strongly after the initial signs of de-escalation, this was only partially the case for bonds. Government bonds in Swiss francs remain in negative territory on an annual basis and are around 2 percent below the record highs of the end of February.

Trend in 10-year yields to maturity

In percent

The sharp rise in oil prices as a result of the Middle East conflict has significantly exacerbated fears over inflation on the bond markets. Interest rates on government bonds have risen worldwide: ten-year German government bonds now yield over 3 percent, a level last reached in 2011. In the USA, yields remain around 20 basis points above the level at the start of the war, despite some easing after the latest ceasefire news.

Credit spreads on corporate bonds

In percentage points

Credit spreads on corporate bonds reacted to the Middle East conflict later and to a lesser extent than, for example, the equity markets. While the risk premium has since risen sharply, it is much lower than when Trump announced trade tariffs a year ago. The credit spread narrowed quickly and is currently at a very low level again.

Equity markets fluctuated sharply last month, before recovering strongly. Globally, however, they remain below the highs of the end of February.

Indexed stock market performance in Swiss francs

100 = 01.01.2026

Global equity markets experienced turbulent conditions last month. In the first half of the month, rising oil prices and the associated fears of inflation weighed on prices significantly. Signs of de-escalation in the Middle East conflict led to a sharp reversal at the turn of the month. Although the equity markets rose in Swiss francs over the course of the month, the recovery appears fragile, as one of the main conditions of the ceasefire, the opening of the Strait of Hormuz, remains unfulfilled and oil prices remain at just under 100 US dollars per barrel. Even on an annual basis, most markets have returned to positive territory after losses of up to 10 percent.

Momentum of individual markets

In percent

The strong recovery on the equity markets in the first two weeks of April meant momentum on the global equity markets remained predominantly in positive territory. However, it is noticeable that the US market is still moving sideways, mainly because the major tech stocks have performed poorly this year. Momentum remains strongest in South Korea and Taiwan, and this is based on a small number of larger fluctuations in local tech stocks.

Price/earnings ratio

Corporate earnings rose again worldwide in the first quarter. Also, equity prices remain below their record highs of the end of February, despite their recovery in recent weeks. Taken together, these have led to a slight reduction in the price/earnings ratio. However, the valuation level of global equities in particular remains at a historically high level.

Exchange-listed Swiss real estate funds have recouped their losses recently. However, they remain just in negative territory over the year.

Indexed performance of Swiss real estate funds

100 = 01.01.2026

Rising capital market interest rates on Swiss government bonds and anxiety on the financial markets had an impact on listed Swiss real estate funds over the course of the month. At the beginning of April, the loss stood at over 5 percent on an annual basis. Despite only a limited fall in capital market interest rates, real estate funds have recently made a significant recovery. After this recovery, their prices have returned to levels at the start of the year.

Premium on Swiss real estate funds and 10-year yields to maturity

In percent

Higher capital market interest rates in Switzerland since February have slightly reduced the premium that investors pay for exchange-listed real estate funds compared to the net asset value of the underlying properties. Despite this slight decline, the valuations of real estate funds remain at a level that has historically only been observed during periods of negative interest rates.

Vacancy rate and real estate prices

100 = January 2000 (left) and in percent (right)

Real estate prices continued their upward trend in the fourth quarter. Compared to the last quarter, the prices of apartments rose more sharply than those of single-family homes. The prices of rental properties also rose, but again only to a small extent. The reference interest rate was reduced again in September 2025, which may explain the more moderate trend in rental apartments. The vacancy rate currently remains at a very low level, which is likely to remain the main reason for rising real estate prices.

Currencies

The Swiss franc remained weak again last month, against both the US dollar and the euro.

Source: Allfunds Tech Solutions

The Swiss franc came under pressure again last month and fell again against the major currencies. The weakness against the euro, which gained over 2 percent over the course of the month, was particularly pronounced. This means that, over the year, the Swiss franc lost almost its entire lead over the euro. The Swiss National Bank is likely to have intervened again this month to counteract any further appreciation. The US dollar initially benefited from its safe-haven status, but lost most of these gains as de-escalation began and ended the month virtually unchanged on a trade-weighted basis.

^{Source: Allfunds Tech Solutions, Coin Metrics Inc}

Gold

Last month, the gold price (as measured in Swiss francs) fell sharply in value, but has stabilized again recently.

Indexed performance of gold in Swiss francs

100 = 01.01.2026

Last month, the gold price suffered its second major correction this year. After hitting previous record highs again in early March, the start of the war in the Middle East triggered another sell-off. This was mainly due to the stronger US dollar, rising interest rates and liquidity sales by investors, resulting in an interim loss of over 13 percent in Swiss franc terms. However, the price recovered significantly in the first two weeks of April, so the monthly loss was limited to 5 percent and the annual return remains attractive at 8 percent.