Global equities rally strongly on two-week ceasefire framework in the Middle East. Japanese equities led the way, while UK equities were the laggard.

 

Last week’s performance – major stock markets 

 

S&P 500	3.56%
Nikkei 225	7.15%
CSI 300	4.41%
Euro Stoxx 50	4.1%
FTSE 100	1.57%

 

Commentary

 

US: Equities jump on two-week ceasefire framework in the Middle East
US equities recorded a second consecutive week of strong gains as signs of de-escalation in the Middle East led to falling oil prices and improved risk sentiment. Markets opened the week on a cautious footing, but sentiment improved sharply later in the week following reports of a two-week ceasefire framework. Oil prices, which had risen sharply in recent weeks, fell heavily on Wednesday, marking their largest daily drop since 2020. The Nasdaq led advances on continued enthusiasm around artificial intelligence and semiconductor stocks, while energy was the only S&P 500 sector to fall. All major indices rose over 3% for the week. Inflation picked up sharply, driven largely by higher fuel prices, while core inflation rose more modestly. Growth data was revised lower, services activity slowed, and consumer sentiment weakened materially as households grew more concerned about price pressures.

Japan: Equities stage relief rally following ceasefire announcement in the Middle East
Japanese equities rebounded sharply, with the Nikkei rising more than 7%, driven by a relief rally in exporters and technology stocks after worst case geopolitical outcomes were avoided. The government announced an additional release from strategic oil reserves to support energy supply, following earlier draws on stockpiles. Rising energy prices fed through to producer prices, which surprised to the upside, while real wage growth improved but consumer confidence deteriorated sharply amid higher fuel costs.

China: Producer prices increase for the first time in more than 3 years
Chinese equities ended the holiday shortened week higher, supported by easing geopolitical concerns and a notable improvement in producer prices. Producer price inflation turned positive for the first time in more than three years, driven primarily by higher commodity and energy costs rather than stronger underlying demand, while consumer inflation eased. Regulators tightened short term trading rules for major shareholders and executives in an effort to curb speculative behaviour and improve market discipline. Separately, President Xi hosted Taiwan’s main opposition leader in a rare meeting in Beijing, underscoring heightened cross strait tensions ahead of planned high level diplomatic engagements.

Europe: EU forewarns of expected cuts to growth forecasts

European equities rose strongly over the week, as markets rallied on confirmation of a two week ceasefire agreement between the US and Iran. Among major stock indexes, Germany’s DAX closed up 2.74%, Italy’s FTSE MIB rose 4.35%, and France’s CAC 40 Index climbed 3.73%. Against this improved market backdrop, the EU warned that it is preparing to cut its 2026 growth forecasts, citing stagflation risks from weaker growth and rising inflation linked to geopolitical tensions. Economic data remained mixed, with German factory orders growing modestly but missing expectations, services activity contracting again in France and Italy, and UK house price growth slowing more than forecast, reinforcing signs of softer domestic demand.

UK: Equities rally on de-escalating tensions in the Middle East, but lag global peers
UK also rallied for the week but lagged global peers. Prime Minister Keir Starmer pledged to build Britain’s economic resilience on Friday, however, investors were not reassured, with the rally in gilts not sustained. This implies that investors assessed the UK economy as being most exposed to rising energy prices, as a result of the war in the Middle East. UK house prices increased by 0.8% year on year in March 2026, according to the Halifax House Price Index. This marked a slowdown from February’s 1.2% rise and came in below expectations for 1.5% growth. In separate news, UK financial regulators are holding discussions with the government’s main cyber security watchdog and the big banks to assess risks posed by Anthropic’s latest AI model. The model has an advanced ability to detect cyber security vulnerabilities.