Weekly Market Review - 13 April 2026

Global equities rally strongly on two-week ceasefire framework in the Middle East. Japanese equities led the way, while UK equities were the laggard.

US: Equities jump on two-week ceasefire framework in the Middle East

US equities recorded a second consecutive week of strong gains as signs of de-escalation in the Middle East led to falling oil prices and improved risk sentiment. Markets opened the week on a cautious footing, but sentiment improved sharply later in the week following reports of a two-week ceasefire framework. Oil prices, which had risen sharply in recent weeks, fell heavily on Wednesday, marking their largest daily drop since 2020. The Nasdaq led advances on continued enthusiasm around artificial intelligence and semiconductor stocks, while energy was the only S&P 500 sector to fall. All major indices rose over 3% for the week. Inflation picked up sharply, driven largely by higher fuel prices, while core inflation rose more modestly. Growth data was revised lower, services activity slowed, and consumer sentiment weakened materially as households grew more concerned about price pressures.

Japan: Equities stage relief rally following ceasefire announcement in the Middle East

Japanese equities rebounded sharply, with the Nikkei rising more than 7%, driven by a relief rally in exporters and technology stocks after worst case geopolitical outcomes were avoided. The government announced an additional release from strategic oil reserves to support energy supply, following earlier draws on stockpiles. Rising energy prices fed through to producer prices, which surprised to the upside, while real wage growth improved but consumer confidence deteriorated sharply amid higher fuel costs.

China: Producer prices increase for the first time in more than 3 years

Chinese equities ended the holiday shortened week higher, supported by easing geopolitical concerns and a notable improvement in producer prices. Producer price inflation turned positive for the first time in more than three years, driven primarily by higher commodity and energy costs rather than stronger underlying demand, while consumer inflation eased. Regulators tightened short term trading rules for major shareholders and executives in an effort to curb speculative behaviour and improve market discipline. Separately, President Xi hosted Taiwan’s main opposition leader in a rare meeting in Beijing, underscoring heightened cross strait tensions ahead of planned high level diplomatic engagements.

Europe: EU forewarns of expected cuts to growth forecasts

European equities rose strongly over the week, as markets rallied on confirmation of a two week ceasefire agreement between the US and Iran. Among major stock indexes, Germany’s DAX closed up 2.74%, Italy’s FTSE MIB rose 4.35%, and France’s CAC 40 Index climbed 3.73%. Against this improved market backdrop, the EU warned that it is preparing to cut its 2026 growth forecasts, citing stagflation risks from weaker growth and rising inflation linked to geopolitical tensions. Economic data remained mixed, with German factory orders growing modestly but missing expectations, services activity contracting again in France and Italy, and UK house price growth slowing more than forecast, reinforcing signs of softer domestic demand.

UK: Equities rally on de-escalating tensions in the Middle East, but lag global peers

UK also rallied for the week but lagged global peers. Prime Minister Keir Starmer pledged to build Britain’s economic resilience on Friday, however, investors were not reassured, with the rally in gilts not sustained. This implies that investors assessed the UK economy as being most exposed to rising energy prices, as a result of the war in the Middle East. UK house prices increased by 0.8% year on year in March 2026, according to the Halifax House Price Index. This marked a slowdown from February’s 1.2% rise and came in below expectations for 1.5% growth. In separate news, UK financial regulators are holding discussions with the government’s main cyber security watchdog and the big banks to assess risks posed by Anthropic’s latest AI model. The model has an advanced ability to detect cyber security vulnerabilities.

What's important next: Week 13 April to 17 April 2026

Middle East negotiations breakdown, with the US announcing a blockade of Iranian ports

Why it's important

The breakdown of talks highlights the widely divergent negotiating positions of both sides. The US blockade marks a further dangerous escalation in an unprecedented global energy shock and means that the best-case scenario now is probably a slower resumption of traffic through the Strait of Hormuz.

Iran earns much-needed revenue from energy exports and has continued with them through the war, so the fact that those flows have not been targeted by the US up until now is a bit of a surprise. Current shut-ins across Middle East Gulf oil producers amount to roughly 13 million barrels per day, out of a global market of approximately 105 million barrels per day. Blockading Iran would raise that to approximately 15 million barrels per day.

Expect oil and gas prices to increase further having weakened on the expectations of talks. Volatility is likely to remain. Global equities are likely to retrace as the war grinds on (the strait has been effectively shut for six weeks now), keeping fuel prices high and dampening growth. The impact on bonds will be closely watched, with there being a trade-off between growth and inflation. European assets may be somewhat insulated this week, following a landslide election victory for Hungary's pro-Europe opposition Tisza party.

US quarterly reporting season gets under way

Why it's important

After last week's US inflation figures and the employment report from the week before, tier-1 economic data takes something of a breather this week. However, the US quarterly reporting season now gets under way. As usual, the major banks will get things started; Goldman Sachs report on Monday, JPMorgan, Citigroup and Wells Fargo on Tuesday, followed by Morgan Stanley and Bank of America on Wednesday.

This will help give a read on how the banking sector is viewing the economy overall but also on the health of corporate bond markets, particularly for banks with significant exposure to private markets. This was a focus for markets before conflict in the Middle East pushed it off the front pages. If credit conditions weaken, it may become more difficult/expensive for companies to refinance debt, meaning they may have to make cutbacks elsewhere. AI disruption had been causing ructions in the software space not that long ago, which pushed down the value of private credit vehicles which had lent to that sector. It was notable that the software sector was under pressure again last week, marking a new low for the year.

Issued by Omnis Investments Limited. This update reflects Omnis’ view at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.