Week Ahead
Market sentiment is likely to remain fragile this week as investors focus on Tuesday’s expiry of the temporary US-Iran ceasefire, with diplomatic negotiations reportedly stalled. The risk of renewed tensions has kept concerns over inflation and potential supply disruptions elevated. Adding to the cautious tone is the Fed’s blackout period, which leaves investors without official policy guidance ahead of next week’s FOMC meeting. Corporate earnings will also be in focus, with United Airlines (Tue), followed by Tesla, IBM and Boeing (Wed), with airline guidance particularly relevant given elevated fuel prices. Markets will also watch the Senate Banking Committee hearing for Kevin Warsh’s Fed nomination (Tue).
Today is relatively quiet, featuring UK Rightmove house prices. Tuesday brings the Germany ZEW expectations survey, UK labour market data, and US retail sales and pending home sales, alongside remarks from ECB officials Nagel and Kocher. Wednesday’s focus shifts to Eurozone consumer confidence and UK CPI, with speakers including ECB President Lagarde, as well as Sleijpen, Bosch and BoE’s Breeden. Thursday brings a heavy macro calendar with global PMI releases, UK consumer confidence and US initial jobless claims. While Friday rounds out the week with Germany’s IFO business climate survey and the US University of Michigan consumer sentiment reading.
Asset classes witnessed a further volatile week with sentiment improving into Friday’s session. The Strait of Hormuz blockade initially rattled markets with supply-shock fears before rallying on news of a potential ceasefire and the eventual reopening of the waterway. We also had growth warnings from the IMF and World Bank Spring Meetings, and a resilient start to the Q1 corporate earnings season, which helped major US indices climb toward new highs. The S&P Index gained 4.54%, breaking through 7,000 reaching an all-time high. Meanwhile, the yield on the 10-year strengthened 7bps to 4.25%. The dollar fell for the third consecutive week, DXY Index closed 0.56% lower. Brent crude fell 5.06%, to $92.42pb.
The Fed’s messaging has continued to emphasise a cautious wait-and-see stance ahead of the April 28–29 FOMC meeting. Last week’s Beige Book was particularly notable, highlighting how the US-Iran conflict is creating significant business uncertainty, with volatile energy and input costs complicating corporate hiring and investment decisions. Beyond the data, market attention has also turned to the future of Fed leadership as Chair Powell approaches the end of his term in May. Combined with the Fed’s preference to keep rates at 3.5%–3.75% while inflation risks remain elevated, investors are still focused on how policymakers will balance price stability, growth risks and institutional independence amid rising geopolitical and economic pressures.
Elsewhere, China’s Q1’26 GDP growth accelerated to 5% from 4.5% in the previous quarter, beating expectations and signalling a resilient start to the year despite March’s energy shock. Growth was supported by earlier policy easing, while Beijing continued to emphasise high-quality development under the new 15th Five-Year Plan, with a focus on structural reform, artificial intelligence and green energy. Momentum may soften modestly in the second quarter as front-loaded fiscal support fades and local government financing constraints persist, though still consistent with the official annual target. Policymakers are therefore under less pressure to ease immediately, with any rate cuts more likely in the second half of the year. Meanwhile, renewed US-Iran tensions could offer a modest export tailwind by boosting demand for Chinese energy-transition products and reinforcing China’s appeal as a reliable global manufacturing hub.
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