The week that was …
Economic round-up
Fed minutes raise prospect of US rate hikes
The latest Federal Reserve minutes, released last week, showed a growing number of the US central bank’s rate-setting committee thought interest rate hikes might be needed to counter inflation, as the inflationary impact of the US/Israeli war with Iran began to hit. Read more from Reuters here
Iran war impact feeds through to US prices …
The impact of the war in Iran finally started to feed through into US consumer prices in March, as the country’s Consumer Price Index increased by the most in nearly four years. Prices meanwhile advanced 3.3% year-on-year – the strongest increase since May 2024. Gasoline prices account for nearly three-quarters of the rise in inflation. Read more from Reuters here
… and pushes up Chinese PPI inflation too
Producer Price Index (PPI) inflation in China increased 0.5% from a year earlier – an early sign the conflict in Iran is creating cost pressures in the world’s second-largest economy. If inflation is driven by higher costs rather than stronger demand, economists warn, it could squeeze corporate margins, dampen growth and restrict the capacity for government stimulus. Read more from Reuters here
US PCE price index up more than consensus forecasts
The February Personal Consumption Expenditures Price Index in the US posted a stronger-than-expected increase – rising 2.8% from a year ago. This was ahead of economists’ consensus forecasts of 2.6%. Core inflation, which excludes volatile food and energy costs, was even higher, at 3%. Read more from Morningstar here
US consumer sentiment hits lowest level since 1980 …
US consumer sentiment, as measured by the University of Michigan index, fell from 53.3 in March to 47.6 in April – its lowest level since May 1980. Business conditions expectations were found to have declined by 20%, while assessments of personal finances dropped by 11%. Read more from Equiti here
… but manufacturing sentiment edges up
The US ISM Manufacturing Purchasing Managers Index increased to 52.7 in March 2026 – up from 52.4 in February and ahead of consensus forecasts of 52.5. This marked the strongest growth in factory activity since August 2022. New orders slowed, however, while employment contracted slightly more quicly. There were also signs of increasing price pressures. Read more from Trading Economics here
Markets round-up
Investors pause to ‘catch breath’
The FTSE 100 was little changed when it closed on Friday, ahead of peace talks between the US and Iran. David Morrison, an analyst at Trade Nation, said investors were pausing to “catch their collective breath heading into the weekend”. The FTSE 100 closed down just 2.95 points at 10,600.53. For the week, the UK’s blue-chip index was 2.3% higher. Read more from the Independent here
S&P 500 flagging under Trump administration
The performance of the S&P 500 during the current US administration has been worse than the equivalent period under the previous four presidents, according to the FT’s Unhedged analysis. This was in spite of the US economy being in good shape as president Trump began his second term in January 2025, with the equity market performing well. Read more from the FT here
Iran conflict will ‘scar’ global economy, asset managers warn
The conflict in the Middle East will leave “scar tissue” in global markets even if a peace deal is reached, asset managers have warned, with commodity prices and bond yields unlikely to return to pre-conflict levels in the short term. Damage to Gulf infrastructure and the loss of confidence after Tehran’s de facto closure of the Strait of Hormuz is expected weigh on a recovery. Read more from the FT here
North Sea oil hits new highs
A rush among European and Asian refineries to secure oil cargoes in the face of limited Middle East supply has pushed North Sea oil prices to a record high. Forties Blend, a marker for oil for immediate delivery, hit almost $147 (£110) a barrel on Thursday. The physical barrels from the North Sea were trading far above the roughly $97 price of Brent, the international benchmark, for delivery in June. Read more from the FT here
S&P launches hedge for private credit
S&P Dow Jones Indices is launching a new credit-default swap index linked to the private credit market. The aim is to give investors a tool to short the under-pressure sector. The CDX Financials index includes a broad range of 25 North American financial entities, spanning banks, insurers, real estate investment trusts and business development companies. Read more from Reuters here
Airlines suffer as jet-fuel shortages hit
Half-term breaks and summer holidays are at risk of cancellation, with airports in Europe warning they will run out of jet fuel within weeks unless supplies from the Middle East increase dramatically. Read more from the Times here
“With earnings season coming up and hopes raised the spike in energy prices will now prove relatively short-lived, there are reasons to remain positive given economic survey data has softened but not slumped.
Selected equity and bond markets: 03/04/26 to 10/04/26
| Market | 03/04/26 (Close) |
10/04/26 (Close) |
Gain/loss |
|---|---|---|---|
| FTSE All-Share | 5566 | 5664 | +1.8% |
| S&P500 | 6583 | 6817 | +3.6% |
| MSCI World | 4316 | 4474 | +3.7% |
| CNBC Magnificent Seven | 375 | 394 | +5.1% |
| US 10-year treasury (yield) | 4.32% | 4.34% | |
| UK 10-year gilt (yield) | 4.78% | 4.77% |
Investment round-up
ISA investors top up on global trackers
ISA holders turned to global tracker funds in the end-of-tax-year rush, according to Hargreaves Lansdown. The data covering 30 March to 3 April showed evidence of strong demand for low-cost, diversified products, including Fidelity Index World, Vanguard FTSE Global All Cap index and HSBC FTSE All World index.
Khowala to succeed Birrell at Premier Miton
Premier Miton has hired Fidelity International fund manager Aditya Khowala as the firm’s new head of global equities. Khowala had spent two decades at Fidelity and will succeed Neil Birrell. He will also help manage the Premier Miton US funds.
JPMAM takes Courage in private markets
J.P. Morgan Asset Management has appointed Miles Courage as head of private markets for Europe, Middle East and Africa, with immediate effect. In this newly created role, Courage will lead JPMAM’s Private Markets business across EMEA and oversee the development and delivery of the group’s private markets product solutions.
SDCL Efficiency Income in wind-down
SDCL Efficiency Income Trust is to start a managed wind-down after failing to obtain shareholder support to become an energy services operating company. The trust has persistently traded at a significant discount to its net asset value. Chair Tony Roper said the company had been a victim of difficult circumstances.
ETF and ETC flows take a hit
European exchange-traded funds and exchange-traded commodities suffered a sharp decline in flows in March, according to Morningstar’s latest Europe ETF Monthly Flows Round-up. European ETFs and ETCs attracted €9.4bn (£8.2bn) for the month – a marked drop from €45.4bn in February and €46.8bn in January.
LTAF assets bounce
Assets held in long-term asset funds approved by the Financial Conduct Authority have increased to around £7.3bn, data from Morningstar has shown. This represented an increase of £2.3bn from June 2025.
IPOs spark into life across EMEA
The EMEA geographical grouping raised $7.4bn across 34 IPOs during the first quarter of 2026, with the defence, energy and industrials sectors leading the fundraising. This was a 30% increase year-on-year, according to PwC’s latest IPO Watch.
… and the week that will be
First-quarter earnings season
First-quarter earnings season kicks off this week, led by the US banks. There are some expectations for a strong quarter, which have helped sustain the bullish outlooks for stocks even amid the crisis in Iran. The earnings season should demonstrate whether the corporate profit engine remains intact. Read more from Reuters here
Markets resume familiar pattern
After peace talks ran into trouble this weekend, markets resumed a familiar pattern, with oil up, shares down and government bonds selling off. President Trump has now threatened to blockade the Strait of Hormuz – though it is unclear what this would achieve in practice. It may be another rollercoaster week of negotiations. Read more from Investopedia here
The week in numbers
UK economic growth: Consensus on the three-month average UK GDP forecast is a 0.3% rise in February – up from 0.2%.
BoE governor’s speech: Bank of England governor Andrew Bailey is due to give a speech on Tuesday 14 April at Columbia University in New York on the subject of ‘Rethinking central bank independence in an era of financial instability’.
US inflation: Consensus expectations are for US prices to have risen 1.3% month-on-month in March – up from 0.7% in February. Core Producer Price Index inflation is expected to be up 0.4%, from 0.5%.
US manufacturing: The US Empire State manufacturing index is expected to fall to -3.1 in April, down from -0.2 the month before.
China economic growth: Consensus forecasts are that first-quarter GDP growth in China will rise to 4.6% from 4.5% year-on-year; but slow to 0.8% from 1.2% quarter-on-quarter.
In focus: Bargain hunt
Negotiations between the US and Iran to end the conflict may have come to nothing over the weekend but the broad feeling among investors appears to be that momentum is ultimately in the direction of peace. For much of last week – and despite intractable dividing lines between the two countries and the consequent implausibility of the ceasefire holding – global financial markets rallied. While ‘buying the dip’ now looks tricky, then, has the recent volatility left any bargains for more bullish investors?
As Antony Willis, senior economist in the multi-asset solutions team at Columbia Threadneedle, points out, the major indices have recovered much of the losses seen in the weeks since the conflict began. “Both the major US and pan-European indices are within 3% of all-time highs seen earlier in the year – having been down as much as 9% from those highs in recent weeks,” he adds.
“With earnings season coming up and hopes raised that the spike in energy prices will now prove to be relatively short-lived, there are reasons to remain positive given that economic survey data has softened but not slumped. The earnings outlook should remain supportive, though there is still likely to be volatility ahead.”
The broader recovery does, however, mask a shift in distribution for the market leaders and laggards. The Iran conflict initially followed a familiar pattern, with energy and utilities rallying, and consumer stocks sold off, but the subsequent volatility has created a murkier picture.
As Evelyn Partners managing director Jason Hollands observes, over the past week some of the strongest rebounds have come in areas that were hardest hit earlier in the conflict.
“Emerging Markets rose 4.7% over the week, while US technology-focused indices also performed strongly, with the NASDAQ up 3% and the Magnificent Seven gaining 2.9%,” he says. “Gold – which has not acted as a traditional safe haven during this period – appears to have stabilised, supported in part by a weaker US dollar.”
With the caveat there are still plenty of risks – most obviously, the ceasefire may not hold and the Strait of Hormuz remains, by and large, shut – investors may want to start looking around for any areas where volatility has created opportunities.
This crisis may once again refocus governments’ minds on energy security – of which renewable energy is an important part.”
A good starting point could be the areas that have been weakest – and, in sector terms, this is healthcare. Pharmaceutical companies are down 3.9% this month, while equipment and services stocks ae down 4.9%. This dents a nascent recovery in the healthcare sector in the latter part of 2025, which market watchers have attributed to profit-taking after a rally at the end of the year. As a result, believes Gareth Powell, manager of the Polar Capital Healthcare Trust, share prices now look “dislocated from fundamentals”.
The sector is also supported by M&A, with Powell adding: “For investors, M&A has been a meaningful driver of returns. Takeover premiums in healthcare are often substantial, with premiums of more than 50% to the pre-announcement share price not uncommon.
“Periods of political controversy, tariff rhetoric and regulatory uncertainty have left parts of healthcare trading at discounts to historical averages. Yet underlying fundamentals – scientific innovation, demographic demand, and resilient end-markets – remain intact. In this context, consolidation serves as both a catalyst and a validation of value.” The sector is also backed by value investors such as Ben Peters, manager of the Evenlode Global Equity Income fund.
Some parts of the consumer market have also been hit hard. While there are clear risks from higher inflation, Franklin Templeton had been increasing its exposure to consumer staples across its strategies, believing the sector can weather both an economic slowdown and the disruption of AI.
“Consumer demand for staples products is generally considered ‘evergreen’ and non-cyclical,” the company explains. “The industry is also relatively invulnerable to AI disruption. This in turn should support stable cashflows and revenue generation.”
Emerging markets
Emerging markets may be a further area of potential opportunity. The asset class may have rallied over the past week but the MSCI Emerging Markets was down 13.1% in March. Michael Grady, head of investment strategy at Aviva Investors, says the group remains overweight in emerging markets, arguing the rally in the US dollar appears to have weakened once again, and some emerging markets may be active beneficiaries of the conflict as geopolitical fault lines are redrawn.
There may be opportunities too among those sectors where war has forced a reappraisal. Within energy, for example, renewables have been the stand-out winners, with the average renewable energy company up 9.5% over the past month. By comparison, oil and gas companies are up around 3.3%.
This crisis may once again refocus governments’ minds on energy security – of which renewable energy is an important part. Earlier this month, the International Energy Agency issued a reminder that total global renewable power generation capacity would need to triple by 2030 to keep global warming to 1.5 degrees, alongside a doubling in energy efficiency. This sector has been beaten up and still looks cheap.
As there is no political will to enact expenditure cuts on a scale required to consolidate debt, successive governments stagger helplessly from one crisis to the next.”
In contrast, those hoping for an opportunity to buy usually expensive technology stocks for a song may be disappointed. Technology has been one of the stronger areas since the start of the conflict, with the MSCI World/Information Technology and Nasdaq indices up 1.4% and 0.9% respectively, according to Evelyn Partners.
Even where share prices have dropped, managers are steering clear. Microsoft, for example, is down 22% for the year to date, but Terry Smith of Fundsmith has halved his holding, while Manchester & London investment trust manager Mark Sheppard has also pared back his large holding in the group.
There may be more bargains to be found in the bond markets – albeit less so among corporate bonds. Credit spreads have barely moved and remain just off their lows. Back at Aviva Investors, Grady says: “The team continue to see the risk-reward as unfavourable given that spreads remain relatively tight and both duration and spread risks have risen.” As such, they remain underweight in the subsector.
Government bonds
It is a different picture, however, in government bonds where there have been huge – occasionally wild – jumps in yields. The UK 10-year government bond yield is up some 40 basis points over three months, for example, while German bond yields are up 20 basis points over the same period. Other indebted countries, such as Italy, have also seen significant moves.
Of these, the gilt market appears to be the obvious area to target, though Emma Moriarty, portfolio manager at CG Asset Management, warns the market continues to be choppy. “It is notable that the frequency of gilt crises appears to be increasing,” she continues.
“Excessive debt and anaemic economic growth has left the UK economy extremely vulnerable to adverse economic developments. As there is no political will to enact expenditure cuts on a scale required to consolidate debt, successive governments stagger helplessly from one crisis to the next.”
For his part, David Roberts, head of fixed income at Nedgroup Investments, has been topping up on gilts, arguing the sell-off looks “overdone”, with too much emphasis on the potential inflation shock from higher energy price, and not enough attention on the potential growth shock.
Moriarty meanwhile points out that index-linked yields have fallen over the quarter even as nominal yields have risen. “Investors have been prepared to pay more for inflation-protected bonds – particularly at the short end of the curve,” she adds. “Since 2022, linkers have repriced to much more defensive levels and are now acting in a much more reliable fashion.”
The recent extreme market volatility has certainly created areas of interest in global financial markets. That said, it is not as simple as ‘buying the dip’, with many parts of the market looking every bit as expensive as before – and potentially holding more risk.
Read more on this from FRED here, from Interactive Investor here and from IRENA here
In focus: Cultural evolution?
According to the Investment Association, the UK has the lowest rate of personal investment in the G7 grouping of richest nations, which stifles growth, constrains funding for business and condemns people to “anaemic growth” in their savings. Yet could a government finally be taking measures to address the overzealous regulation that has suppressed the growth of a savings culture in the UK?
Last week, the Risk Warnings Review, which was set up by chancellor Rachel Reeves, issued its final report Supporting a New Retail Investment Culture, with forewords from both HM Treasury and the Financial Conduct Authority. The report aims to encourage financial services firms to present risk information in a “balanced and contextual way”.
“This marks an important turning point in how we talk about investing in the UK,” says IA chief executive Chris Cummings, who chaired the Review. “For too long, well-intentioned rules and industry caution have resulted in warnings that overwhelm rather than inform, discouraging people from taking the long-term decisions that could strengthen their financial resilience.”
The report argues financial services firms will now need to reflect factors such as time horizon, diversification and comparisons to cash. The aim for the government may be to galvanise economic growth, it adds – but there should also be an impact on long-term wealth generation.
The report was welcomed by industry participants, with AJ Bell D2C managing director Charlie Musson observing: “This is a helpful step toward bringing some balance to the way we talk about investment risk and reward – helping consumers recognise the long-term benefits of investing, without ignoring the fact it is entirely normal for a portfolio to fluctuate up and down in value over time.
For his part, James Heal, director of public policy at St. James’s Place, says the new framework should give firms greater confidence to talk about investing in a way that is “clear, proportionate and genuinely focused on consumers”.
“It supports a more balanced approach to risk disclosures, including reducing the use of risk warnings where they add little value,” he continues. “It also makes clear that explaining risks in a way that helps consumers understand their nature and likelihood is permitted because it does not amount to diminishing those risks.”
Indeed, a recent behavioural science report from St. James’s Place suggests small changes in how investing is communicated can have a meaningful impact on confidence and willingness to invest. “This new guidance should lead to better-quality communications that inform rather than deter,” Heal adds.
A change in emphasis has been desperately needed for some time, with risk warnings significantly out of proportion to the real risks involved in most collective investment funds. Meanwhile, crypto, spread-betting and gambling have been subject to little or no risk warnings. The question is whether compliance departments, which have long had a stranglehold over all communications from investment firms, will be able to adapt.
