The week that was …
Economic round-up
Iran war stokes UK inflation
The UK rate of inflation rose to 3.3% over the year to March, driven by higher fuel costs as the war in Iran pushed up global oil prices. Given the data was collected in mid-March, the full impact of the conflict is expected to take longer to filter through to other areas. Read more from the BBC here
Fuel demand prompts retail sales jump
Motorists stocking up on fuel helped to push up retail sales in the UK over March. According to the Office for National Statistics, the volume of retail sales rose by 0.7% last month – well above consensus analysts’ forecasts of just 0.1%. Fuel sales volumes rose 6.1%. Read more from the Guardian here
Unexpected drop in UK jobless numbers
The UK unemployment level fell unexpectedly in the three months to February, partly due to fewer students looking for work while they study. Over the same period, wages rose at an annual pace of 3.6%, the weakest rate since late 2020. Read more from the BBC here
PMI red flag on input prices
UK manufacturing activity rose ahead of expectations, according to the latest composite purchasing managers’ index (PMI), which hit 52 in April – up from 50.3 in March. The data, however, also showed the biggest rise in input prices index from one month to the next since records began 28 years ago. Read more from Reuters here
US service-station receipts boost retail sales
US retail sales increased 1.7% in March as the war in Iran led to rises in petrol prices and thus to a surge in receipts at service stations. Tax refunds also underpinned spending elsewhere. This was the largest such rise since March 2025. Read more from Reuters here
US business activity rebounds
US business activity growth rebounded in April having broadly stalled in March. The headline flash S&P Global US PMI Composite Index rose to 52, from 50.3, signalling faster economic growth at the start of the second quarter. Even so, service sector activity remained subdued. Read more from S&P Global here
Euro households increasingly cautious
Euro area consumer confidence slipped by 4.3 points from a month earlier to -20.6 in April 2026 – the lowest level since December 2022. Households are increasingly cautious amid an uncertain economic outlook, with higher energy prices, persistent geopolitical tensions and shipping disruptions. Read more from Trading Economics here
Core inflation slows again in Japan
Japan’s core inflation slowed to 1.8% in March – below the central bank’s 2% target for a second straight month. Government fuel subsidies and moderating food inflation offset price pressures from higher energy costs. Read more from Reuters here
Japan manufacturing sentiment up
The S&P Global flash Japan Manufacturing PMI rose to 54.9 in April, its highest level since January 2022, and up from 51.6 in March. Service sector activity slowed, with the flash Japan services PMI falling to 51.2 in April, down from 53.4 in March. Read more from Reuters here
Markets round-up
BoE warns on markets
The Bank of England deputy governor Sarah Breeden said share prices do not reflect the many risks facing the global economy. She warned there were risks around macroeconomic shocks, private credit and AI. Read more in ‘In focus’ below and from the BBC here
Economists expect Fed to pause on US rate cuts
The Federal Reserve will wait at least six months before cutting US interest rates, according to a Reuters poll of economists, as rising energy costs driven inflation higher. The war in Iran has sent fuel prices up and eroded consumer confidence, wiping out market pricing for rate cuts. Read more from Reuters here
More job-cuts in tech sector
Layoffs in the tech industry are increasing, with those companies spending the most on AI infrastructure also cutting thousands of jobs. Meta said it expected to cut 10% of its workforce, while Microsoft said it was offering employee buyouts for the first time in its 51-year history. Read more from CNBC here
US envoys told to stay home
Donald Trump cancelled a planned trip by special envoy Steve Witkoff and the US president’s son-in-law Jared Kushner to Pakistan, explaining: “Too much time wasted on travelling, too much work! Besides which, there is tremendous infighting and confusion within their ‘leadership’. Nobody knows who is in charge, including them.” Read more from Politico here
Mixed news for the oil price
International benchmark Brent crude futures ended the week little changed at $105.33 (£77.71) per barrel, while West Texas Intermediate futures lost more than 1% to $94.40. The US and Iran had been expected to hold direct talks in Pakistan, but these were ultimately called off. Read more from CNBC here
Macron responds to TotalEnergies warning
Emmanuel Macron said he was focused on efforts to reopen the Strait of Hormuz, after the head of TotalEnergies warned of global energy shortages if the Iran war was prolonged. Macron said panic caused by geopolitical uncertainty could lead to shortages on its own. Read more from Reuters here
New record high for Nvidia
Nvidia shares closed at a record high on Friday, pushing the company’s market cap past $5tn, as investors appeared to be anticipating strong earnings from tech’s hyperscalers. Nvidia is up more than 14-fold since the end of 2022, driven by soaring demand for artificial intelligence. Read more from CNBC here
US may offer currency swap lines
The US is discussing currency swap lines with other countries including Gulf and Asian partners, after a number of allies sought help in dealing with the fallout from the Iran war. US treasury secretary Scott Bessent said swap lines would be helpful to both the US and other nations. Read more from Reuters here
“From decarbonisation to artificial intelligence, the crux of what matters for the future is enabled by or inside the emerging markets.
Selected equity and bond markets: 17/04/26 to 24/04/26
| Market | 17/04/26 (Close) |
24/04/26 (Close) |
Gain/loss |
|---|---|---|---|
| FTSE All-Share | 5720 | 5566 | -2.7% |
| S&P500 | 7126 | 7165 | +0.6% |
| MSCI World | 4650 | 4633 | -0.4% |
| CNBC Magnificent Seven | 428 | 430 | +0.4% |
| US 10-year treasury (yield) | 4.25% | 4.31% | |
| UK 10-year gilt (yield) | 4.69% | 4.95% |
Investment round-up
City of London reforms in King’s Speech
A package of City of London reforms, including changes to major regulators, will be included in the King’s Speech on 13 May. Legislation is needed to complete several planned reforms to key pillars of City regulation, such as scrapping the payments watchdog and overhauling the financial ombudsman.
Shackleton to buy Hurst Point group
Shackleton has entered into an agreement to acquire Hurst Point Group in a deal that would create one of the UK’s largest independent financial planning firms, with combined assets under advice and management of £17.5bn.
GSAM adds to active ETF range
Goldman Sachs Asset Management has added global credit and income strategies to its active fixed income ETF range. The Global Credit Plus Active and Global Income Bond Opportunities Active Ucits ETFs are listed on the London Stock Exchange and SIX Swiss Exchange.
AJ Bell reports strong Q1 flows …
AJ Bell has reported record inflows on its investment platform for the first quarter of 2026, bringing assets under administration to £108.7bn. Inflows for the quarter totalled £5.6bn – up 40% year on year.
… while Quilter inflows top £3bn
Quilter achieved record net inflows of £3bn in the first quarter of 2026, although some of those gains were offset by market movements following the war in Iran. The wealth manager reported group assets under management and administration of £141.9bn as at the end of March.
Advisers are getting younger – FCA survey
The Financial Conduct Authority’s 2025 Adviser Survey has found there are 15% fewer advice firms in the UK since 2021 after a wave of consolidation. There are now around 31,000 advisers, with a lower average adviser age than previously.
AllianceBernstein launches three ETFs
AllianceBernstein has launched an active ETF business in Europe, with three Luxembourg-domiciled Ucits fixed income ETFs: the AB Global Corporate Bond, AB USD Corporate Bond and AB EUR Corporate Bond Ucits ETFs.
European funds enjoy strong Q1 inflows
Excluding money market vehicles, European funds gathered €184.2bn (£159.7bn) in the first quarter of 2026 – a 19.4% increase from the previous quarter – according to Morningstar’s review of the European open-ended ETF market. The majority of the flows came in January and February, however, with outflows of €18.7bn in March.
Liontrust sees outflows slow
Liontrust has seen its outflows slow from £1.3bn in the first quarter of 2025 to £800bn in the corresponding period in 2026, as investors diversify away from US equities. Assets under management and advice stood at £20.8bn as of April 20, the group said.
… and the week that will be
Tech earnings to test durability of US rebound
The recent US stockmarket rally faces a stern test from a mammoth week of corporate results led by major technology companies. Equity indices have soared this month, rebounding from worries about economic fallout from the Iran conflict, with the benchmark S&P 500 now up some 13% since 30 March. Over the same period, the tech-heavy Nasdaq Composite has jumped more than 19%. Read more from Reuters here
Investors await Fed meeting for US rates clues
The Federal Open Market Committee will announce its decision on US interest rates before a press conference on Wednesday. Most market-watchers expect the committee to keep the federal funds rate between 3.5% and 3.75%, where it has sat since January. Investors will be watching for clues as to whether rates may come down later this year. Read more from Investopedia here
The week in numbers
UK interest rate decision: Consensus expectations are for the Bank of England to hold interest rates at 3.75% at its meeting on Thursday (30 April).
US economic growth: Consensus forecasts have US GDP growth in the first three months of the year rising to 1.5% quarter-on-quarter, from 0.5% previously.
US consumer confidence: Consensus expectations are that the US consumer confidence index will fall to 91 in April, from 91.8 in March.
US business sentiment: Consensus forecasts have the US ISM manufacturing PMI falling to 52.5 in April from 52.7 the previous month.
Euro interest rate decision: The European Central Bank is widely expected to hold interest rates for the euro bloc at 2.15% after its meeting concludes on Thursday.
Japan interest rate decision: Consensus expectations are for the Bank of Japan to hold interest rates at 0.75% after its latest meeting concludes on Tuesday.
China business sentiment: Consensus expectations are that China’s manufacturing PMI will edge up to 50.6 in April, from 50.4 in March, while the non-manufacturing index will rise to 50.4 from 50.1.
In focus: Emerging force
Despite fears the US tariffs framework last April would pour weed-killer over some promising green shoots of recovery, emerging markets have actually gone on to be the biggest stockmarket winner since ‘Liberation Day’. Now, of course, the energy crisis created by the war in Iran is presenting another challenge for many emerging economies – yet while the near-future may cause investors concern, the longer term appears more encouraging.
Aberdeen research has looked at the performance of six main global indices between the market close on 2 April 2025 – the day of president Donald Trump’s first tariffs announcement – and a year later. It found that while global equity markets unexpectedly saw strong gains over the period, MSCI Emerging Markets was the strongest performer, rising 26%. In contrast, the S&P500 delivered a 9.6% increase, while the Dow Jones and DAX saw more modest gains of 4.4% and 3.1% respectively.
That said, the EM gains have not been evenly distributed. As Michael Bourke, head of emerging market equities at M&G points out, there was a remarkable rebound in Korea (up more than 100%) and a strong recovery in China (some 31%), while India (just 4%) lagged materially. “At a sector level, information technology and industrials were among the strongest contributors to emerging market returns, while consumer staples underperformed,” he explains.
Emerging markets remain the strongest performer for the year to date, with the average fund in the IA Global Emerging Markets sector up 14.9%. AI infrastructure groups such as Samsung, TSMC and SE Hynix have continued to lead the way, although Latin America and other commodities areas have also done well. Again, India has been the noticeable weak spot.
This good performance does not, however, appear to have encouraged investors back to the asset class, with Bourke noting global asset allocators remain relatively underweight. A report from the Institute of International Finance, meanwhile, shows foreign investors pulled $70.3bn (£51.86bn) from emerging market assets in March – the biggest outflow since the pandemic in March 2020.
Ben Durrant, emerging market equity fund manager at Baillie Gifford, describes this state of affairs as a “silent bull market”, which he believes will start to feed through into asset allocation decisions as committees sit down and assess their performance over the past 12 months. “I am not expecting a wholesale move of selling down the US and moving to emerging markets,” he adds. “It is more a steady trickle of people understanding, OK, this is what is going on and tiptoeing in there – and that works fine for us.”
Return on equity has been grinding higher in large Asian markets such as China, Korea and Taiwan, helped by better capital discipline and a growing focus on shareholder value.”
M&G’s Bourke is clear the fundamental backdrop has shifted in emerging markets’ favour. “Consensus expects emerging markets earnings-per-share [EPS] growth in the high-teens to low-20s range for 2026 – comfortably ahead of developed markets and building on an estimated mid-teens EPS expansion in 2025,” he says. “Return on equity has been grinding higher in large Asian markets such as China, Korea and Taiwan, helped by better capital discipline and a growing focus on shareholder value.”
With inflation largely contained, Bourke continues, many emerging market central banks are also ahead of their developed peers in the monetary cycle, offering scope for further rate cuts to support domestic demand. This may be temporarily derailed by the war in Iran, of course, but underlying inflationary pressures remain weaker.
Familiar narratives are being challenged too. According to Sean Peche, manager of the Ranmore Global Equity fund, the narrative around China being ‘uninvestable’ looks odd when set against some of the recent actions of the US government.
Until recently, he argues, the only reason to sell US equities had been the price. “Companies were generally better managed and the dollar’s position as a reserve currency gave investors an extra layer of protection,” he explains. “Now, however, there is inflation, high valuations, an unpredictable government …”
Peche adds that a significant chunk of US debt is due to be refinanced this year at higher interest rates while large IPOs such as Space X, Anthropic and OpenAI each has the power to disrupt US indices. As such, he is seeing more opportunity in emerging markets, including Indonesia and Kazakstan for commodities.
Bourke take a similar view, observing: “The notion China was ‘uninvestable’ back in 2024 was too binary given the complexity and variety of investor choice in the country – and also in light of a more constructive policy stance, an earnings recovery in key new economy sectors and its own role in the burgeoning global AI-related arms race.”
The US was the global political and economic hegemon so the dollar was the only thing you wanted - so that was very straightforward. Looking forward, though, everything has changed.”
Looking longer term, Durrant places emerging markets at the heart of two major global themes: decarbonisation and AI. “If you are looking for a decarbonised economy, you need to rely on emerging markets,” he says, explaining the energy transition is above all an industrial challenge and many of the necessary commodities are only found in those countries.
The same goes for AI adoption. “The areas that dominate the news are Anthropic or OpenAI,” says Durrant. “These are often teenagers in a room creating fantastic software, but the bottlenecks are not about what those guys can do – the real bottleneck is, How many multi-billion dollar data-centres can you fill with advanced technology from North Asia? Intelligence is a manufactured thing now – and the place that does that manufacturing is Asia.” Businesses such as TSMC and SK Hynix will be the main beneficiaries from AI, he suggests.
For Durrant, the growth opportunity generally is just far larger for many emerging market companies. While Amazon is becoming a mature business, he elaborates, companies such as Mercado Libre in Latin America and Shopee in Asia have a far greater runway of growth. “They have more transactions daily outside the US than Amazon does, and yet they are about a tenth of the valuation,” he adds. “The crux of what matters for the future is enabled by or inside the emerging markets.”
So will investors change their view? For Durrant, this depends on whether their view of the US changes. “The US was the global political and economic hegemon so the dollar was the only thing you wanted. This was great, this was simple and investors got paid three times their money for being there. So that was very straightforward. Looking forward, though, everything has changed.”
Again, challenges remain in the short term. Clearly, the energy crisis is creating real problems, with some emerging markets introducing fuel-rationing or encouraging people to work from home. India, once the posterchild for emerging market growth, has been struggling. It remains the weakest major stockmarket for the year to date and there would appear no immediate catalyst for a turnaround in sentiment.
Nevertheless, it is difficult not to be swept along with the idea the world order is shifting and emerging markets could be the strongest beneficiaries. Emerging markets continue to comprise around 40% of the world’s GDP and to deliver around two-thirds of the world’s economic growth – and yet they make up just 10% of global indices. That looks increasingly anomalous.
Read more on this from Alliance Bernstein here and from the BBC here
In focus: Breeden unease
Bank of England deputy governor Sarah Breeden took the unusual step last week of sounding a warning on market pricing. In an interview with the BBC, Breeden said there was “a lot of risk out there and yet asset prices are at all-time highs”, adding: “We expect there will be an adjustment at some point.”
She went on to highlight risks such as macroeconomic shocks, a collapse in private credit and the impact of AI. As the S&P 500 again hits new highs, market pricing certainly does not reflect such concerns.
Breeden is by no means alone in worrying that markets are mispricing risk – in a LinkedIn post, for example, Jurrien Timmer, director of global macro at Fidelity Investments, described the speed of the recovery as “breathtaking”. “The 20% decline in the fourth quarter of 2018 and the 21% decline exactly one year ago produced similar V-shaped recoveries,” he observed. “Now the question is whether the market has gotten ahead of itself in declaring victory? My hunch is yes.”
For his part, James Klempster, deputy head of multi-asset at Liontrust, characterises the current situation as a ‘muddle though’ – noting oil prices may have moved higher but only to around $100 a barrel rather than a more catastrophic $200. “The problem is, this ‘muddle through’ scenario does not have a lot supporting it,” he adds. “There is no material progress to sit behind and justify that. In many ways the interpretation is, ‘no news is good news’ – but there is nothing of substance really for markets to hang their hat on.”
Klempster’s view is there is a lot good news in market prices “despite concerns around growth, despite concentration of valuation in certain markets, not least the US, and indeed, despite a big wall of money over the last 20 years or so going into private markets”. In particular, he highlights Breeden’s concern that, should a series of risks materialise at once, the impact in markets could be very severe indeed.
As such, says Klempster, his approach is to focus on valuations, and diversification, adding: “Invest for the long term, for good reason and based on fundamentals.” Investors find themselves in an odd place – the latest bull run feels unloved and fragile and there is plenty that could knock things off course. Markets are priced for a benign scenario – and that scenario looks increasingly unlikely.
