April was marked by escalating conflict in Iran, which continued to stoke concerns around energy security and inflation. The oil price breached US$126 per barrel – its highest level since 2022 – but subsided to end the month at US$114.
- The IMF cut its forecast for global economic growth
- Central banks – including the Fed and ECB – held rates steady
- US inflation rose to 3.3% YoY
Geopolitics drive volatility: April was marked by escalating conflict in Iran, which continued to stoke concerns around energy security and inflation. The oil price breached US$126 per barrel – its highest level since 2022 – but subsided to end the month at US$114. Meanwhile, the International Monetary Fund cut its 2026 global economic growth forecast from 3.3% to 3.1%. Despite this, equities rose overall, supported by tentative hopes of a peace deal and renewed enthusiasm for AI-related stocks.
“AI-related optimism drove the S&P 500 Index and tech-heavy Nasdaq Index to double-digit gains”
AI optimism powers US gains: in the US, the Dow Jones Industrial Average Index rose by 7.1% during April, while AI-related optimism drove the S&P 500 Index and tech-heavy Nasdaq Index to double-digit gains and new all-time highs. However, consumer sentiment plummeted, according to the University of Michigan index, which cited concerns over rising prices and the Iran conflict. Surging energy costs pushed inflation to 3.3% in March; elsewhere, the US economy expanded by a lower-than-expected 2% year on year during the first quarter.
Fed independence remains in focus: the Federal Reserve (Fed) left the federal funds rate unchanged but retained its ‘easing bias’. Outgoing Fed Chair Jerome Powell warned that the Trump administration’s legal attacks were jeopardising policymakers’ ability to conduct monetary policy without having to consider political factors. Incoming Fed Chair Kevin Warsh insisted that President Trump had not asked him to commit to any particular interest rate decision, and said that he would not agree to do so in any case.
Slower growth in Europe: economic activity in the eurozone showed signs of a slowdown in the first three months of 2026 compared with the final quarter of 2025, easing from 0.2% to 0.1%. The European Central Bank left interest rates unchanged at 2% but refused to rule out an increase if policymakers consider it necessary to achieve their 2% inflation target. Germany’s Dax Index rose by 7.1% over April, lifted partly by enthusiasm for technology-related stocks.
Nikkei hits new highs: Bank of Japan policymakers voted by six to three in favour of maintaining interest rates at “around” 0.75%; nevertheless, the central bank is expected to resume tightening as early as June. Although economic growth is expected to decelerate in the current fiscal year, inflationary pressures are set to intensify. The Nikkei 225 Index rose by 16.1% over April and hit a new high , boosted by yen weakness .
To view the series of market updates through April, click here
