Macro Snapshot – May 2026

April 2026 Market Trends: Markets Climb the Wall of Geopolitical Worry

April’s macro story was one of uncomfortable contrast. On one hand, the Middle East conflict remained the dominant source of global uncertainty, with stalled U.S. - Iran talks, disrupted trade flows, and oil prices continuing to act as the key barometer for investor sentiment. On the other, equity markets staged a powerful rebound, led by U.S. technology stocks and renewed enthusiasm around artificial intelligence. The result was a month where geopolitics, inflation and central bank caution mattered, but corporate earnings and investor appetite for growth mattered more.

In the U.S., equity markets were the clear standout. After the sharp correction in March, investors returned quickly to large-cap technology and AI-related companies, helped by generally supportive first-quarter earnings. The S&P 500 and Nasdaq rallied strongly, with the broader U.S. equity market gaining in sterling terms.

The UK also delivered a positive month, though in more measured fashion. UK equities rose moderately, despite the market’s lower exposure to the AI theme and ongoing concerns around weak domestic growth. The Bank of England held interest rates at 3.75%, but the tone was cautious, with policymakers reluctant to rule out further tightening while oil-driven inflation pressures remain elevated.

Europe participated in the wider equity recovery, with European equities up. The European Central Bank held rates but signalled that a June rise could be possible, underlining how inflation concerns continue to complicate the policy outlook. 

China saw robust returns, while broader emerging markets and India both delivered strong gains, helped by improving risk appetite and continued support from Asia’s technology supply chain. Across Asia more broadly, AI-related enthusiasm supported markets such as Taiwan and South Korea, reinforcing the global nature of the technology rally.

Japan remained an important part of the global policy story. The Bank of Japan held rates, but bond yields moved higher as investors increasingly priced in the possibility of a June rate increase. 

Monthly and long-term performance snapshot

The April performance chart shows a clear split between risk assets and defensive assets. Equities and growth-sensitive commodities dominated the top of the rankings, while bonds and gold struggled as higher oil prices fed inflation concerns. 

The chart below provides a snapshot of unhedged index fund investment returns across a range of asset classes and regional exposures, measured in sterling terms.

Equities rebounded sharply despite the macro noise

April was a reminder that markets do not always move in line with the news cycle. The geopolitical backdrop was difficult, oil prices were elevated, and central banks sounded more cautious. Yet equity markets rallied strongly.

The rally was driven by renewed confidence in corporate earnings, particularly among banks, technology companies and oil-related businesses.

The AI theme was especially powerful. U.S. technology companies led the rebound, with investors once again willing to look beyond short-term uncertainty and focus on the longer-term earnings potential of artificial intelligence infrastructure.

Oil reclaimed its role as the market’s inflation barometer

Oil remained central to the April narrative. Brent crude rose over the month, supported by the ongoing disruption in the Middle East and concerns around the flow of oil through the Straits of Hormuz.

The UAE’s abrupt departure from OPEC added another layer of uncertainty. In normal circumstances, this might have raised questions about future oversupply. But with Middle East oil flows still heavily disrupted, the immediate market focus remained on scarcity, volatility and inflation.

Copper also performed well, reflecting a mix of commodity demand, infrastructure expectations and broader risk appetite.

Oil is once again shaping inflation expectations, central bank rhetoric and investor positioning across asset classes.

Bonds struggled as central banks stayed cautious

Bond markets remained under pressure in April. With oil prices elevated and inflation risks rising, central banks had little room to sound dovish.

The Bank of England held rates but gave no firm reassurance that further increases were off the table. In the U.S., the Federal Reserve leadership change did not lead markets to price in rate cuts, with inflation pressures still too prominent. The ECB and Bank of Japan also signalled that rate increases could be possible in June.

This backdrop weighed on fixed income. U.S. Treasuries fell, all-stocks gilts slipped, and global government bonds rose only a smidge. Gold, which might normally benefit from geopolitical stress, fell too, suggesting that real yields, currency moves and profit-taking mattered more than safe-haven demand during the month.

What stands out for investors

• Equity resilience was the defining feature of April, with U.S. and global equities delivering strong gains despite a difficult geopolitical backdrop.

• AI remains the dominant growth theme, supporting U.S. technology stocks and parts of Asia’s equity markets.

• Oil is driving the inflation conversation, with Brent crude up and central banks reluctant to soften their stance.

• Bonds remain fragile, especially where yields are moving higher in response to persistent inflation pressure.

• Short-term market timing remains difficult, as April showed how quickly markets can rebound even when the headlines remain uncomfortable.

In summary

April was a month that tested investor nerves but rewarded those who stayed invested. The macro backdrop was far from calm: conflict in the Middle East continued, oil prices remained elevated, and central banks were in no mood to declare victory over inflation. Yet equity markets rallied sharply, led by U.S. technology and the continuing enthusiasm around artificial intelligence.

The lesson is not that geopolitics can be ignored. Rather, it is that markets are forward-looking and often more focused on earnings, policy expectations and long-term growth themes than on the immediate news flow. With inflation risks still present and bond markets unsettled, diversification remains important, but April was a powerful reminder that earlier fear-driven decisions can be costly when market sentiment turns.

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Disclaimer: This commentary is for informational purposes only and reflects general market observations. It does not constitute investment advice, a recommendation, or an invitation to engage in any investment activity. Everyone’s situation is different, so if you are unsure about a decision, it’s important to seek guidance from a qualified financial professional.

The views, forecasts, and figures included reflect analysis at the time of writing, unless otherwise stated. sources used are believed to be reliable, but markets and circumstances can change quickly, which means our views may also evolve over time.