Market Review 13th April 2026

Everything you need to know, Simplified!

Summary

• Markets rallied sharply on the two-week ceasefire in Iran, with global equities up 4.1% in USD terms and credit tightening back towards pre-conflict levels

• Performance was broad-based, led by US technology, while energy lagged as oil prices fell back below US$100 per barrel (Bbl)

• Inflation is rising, driven by energy, while growth expectations are being revised lower

• The current state of the ceasefire is opaque, with ongoing disruption in the Strait of Hormuz

• Focus this week shifts to earnings season, with bank results and forward guidance on margins key to determining whether recent market optimism can be sustained.

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Market Review

Markets surge on fragile ceasefire 

Markets swung sharply higher again last week. Global equities gained 4.1% in USD terms, with most of the move concentrated midweek following the announcement of a two-week ceasefire between the US and Iran. A weaker US dollar diluted returns to 2.1% in sterling terms, but the direction of travel was clear as investors moved quickly back into risk.

The rally was broad-based, US equities-led, with technology outperforming. Credit markets followed suit, tightening forcefully back towards pre-conflict levels. Energy was the only sector to post negative returns as oil prices fell back below US$100/Bbl, registering their steepest daily decline since 2020.

Core government bonds rallied over the week, particularly in the UK and Europe, as expectations for rate hikes were pared back. Investors are constantly reassessing the finely balanced and fluctuating risks to inflation and growth. Investor concerns so far have been heavily tilted towards the ‘flation’ over the ‘stag’. The positive moves in bond markets last week were a welcome shift towards the ‘stag’.

Inflation is beginning to move higher, driven entirely by energy costs. In the US, CPI inflation rose to 3.3% year-on-year in March. At the same time, GDP growth has been revised down, highlighting the early signs of a stagflationary impulse. Globally, the picture is one of resilience for now, but with clear signs that the energy shock is beginning to feed through.

The situation in the Middle East is evolving faster than ever. Despite the ceasefire, hostilities never fully halted, with missiles reportedly fired from Iran immediately after the ceasefire announcement, possibly due to poor communication or lack of control within the Iranian army. The unclear terms of the ceasefire (for example whether it applies to Israeli strikes against Hezbollah in Lebanon) highlight the fragility of the agreement.

The trade situation in the Hormuz is still unclear too. Research firm Citrini even sent an analyst to the Strait to report back. After avoiding Iranian drones & patrol boats and after being detained by the Omani coast guard his conclusion was that the Strait is ‘neither open, nor closed’. President Trump has announced that the US will begin to blockade the Strait themselves after talks collapsed in Pakistan over the weekend.

The US has inflicted significant damage against Iranian military and while they are winning the kinetic war they are losing the economic war. The US has devastated Iranian military capability including 90% of its naval fleet. Despite this Iran retains just enough capacity to block the Hormuz and disrupt the flow of commerce. Both sides believe they have the upper hand in negotiations which may be a sign that further damage needs to be done before any ground can be made diplomatically.

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The week ahead

Earnings season

It is a relatively quiet week on the economic calendar, leaving markets firmly focused on developments in the Middle East. However, earnings season now begins, with several major banks kicking things off.

Expectations are high, with banks set to deliver another strong set of results. The focus will be less on the headline numbers and more on guidance, particularly around margins. Can companies sustain margins in the face of rising input costs?

For now, the bar is high and the direction and scale of earnings surprises will be critical in determining whether the recent market optimism is justified.

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