Weekly Market Outlook | 13 – 17 April

Global markets enter the third week of April having weathered one of the most volatile fortnights in recent memory, defined by a single geopolitical pivot: the announcement on the evening of April 8 of a two week ceasefire between the United States and Iran. After weeks of war induced energy shock and risk aversion, investors breathed a collective sigh of relief as stocks surged and oil plunged. The euphoria, however, proved short lived. 

After 21 hours of face to face negotiations in Islamabad, the US and Iran failed to reach an agreement, with Vice President Vance announcing that Tehran had refused to commit to forgoing nuclear weapons development. Following the breakdown, President Trump announced that the US Navy would begin blockading all maritime traffic entering or exiting Iranian ports. Markets open the week facing a renewed escalation cycle, just as the most consequential earnings season of the year gets underway.

Key Points to Watch

• Breakdown of Islamabad Talks and U.S. Naval Blockade:
  Talks have collapsed, effectively ending the ceasefire. The U.S. has confirmed a maritime blockade on Iranian ports starting Monday.
• Q1 2026 Earnings Season, Big Banks:
  Earnings season begins with major banks reporting through the week. JPMorgan will be closely watched for signs of credit stress, consumer weakness, and fee trends.
• March CPI Aftermath and the Fed’s Reaction Function:
  Inflation data has sharpened the Fed’s dilemma. A renewed oil spike could further delay expectations for rate cuts in late 2026.
• Beige Book and Fed Speakers:
  This week’s Beige Book and Fed commentary will be key to assessing how the energy shock is impacting the economy and policy outlook.

United States: Ceasefire Reversal and Earnings Begin

The week ending April 11 was driven by a sharp but short lived ceasefire rally. Oil posted its largest one day drop since 2020, with WTI falling 16.4 percent and Brent down 13.3 percent, while equities surged, led by a 1,325 point gain in the Dow. The optimism faded quickly as ceasefire violations emerged, prompting a more cautious market reassessment by the end of the week.

Inflation data added further complexity, with headline CPI rising to 3.3 percent year on year, driven בעיקר by energy, while softer core inflation offered the Fed some room to stay patient if oil stabilizes. As earnings season begins, markets face heightened uncertainty. Despite expectations of continued earnings growth, macro risks dominate sentiment, with bank results, especially JPMorgan, closely watched for signs of credit stress and broader economic weakness.

Europe & UK : Sentiment Rally Losing Its Footing

European markets captured the ceasefire euphoria with strong conviction. Germany’s DAX soared 5.06 percent and France’s CAC 40 jumped 4.49 percent on April 8, each posting their best single session since March 2022. Yet by the end of the week, enthusiasm had cooled. Markets ended Friday mostly flat as investors braced for the outcome of US Iran negotiations, and the weekend’s failure has reset the risk calculus entirely. The broader European macro picture remains one of fragile equilibrium. 

ECB projections of just 0.9 percent GDP growth for 2026 leave the continent with little buffer against a renewed energy shock, and STOXX 600 companies are expected to deliver only around 4 percent earnings growth for the first quarter, a modest figure that compresses the region’s relative equity premium. For the UK, the Bank of England faces a similar bind, with services inflation still sticky and any renewed supply disruption threatening the OBR’s already pessimistic consumer price trajectory.

Asia & FX Dynamics

The ceasefire’s largest single session beneficiaries were in Asia. South Korea’s Kospi led gains with a 6.87 percent advance on April 8, while Japan’s Nikkei surged 5.39 percent, its best day since last April. Both moves reflected the particular vulnerability of energy importing Asian economies to disruption in the Strait of Hormuz, and both are now exposed to a potential reversal as the blockade takes effect.

 The US dollar’s behavior during the ceasefire week marked a notable departure from prior dynamics. The greenback posted a weekly loss as de escalation raised expectations for eventual Fed easing, making dollar denominated commodities cheaper for other currency holders. That dynamic is now at risk. A renewed oil shock would likely restore the dollar’s safe haven demand, increasing pressure on Asian currencies and commodity importing emerging markets.

Commodities and Rates

Oil’s more than 15 percent drop on April 8 marked a sharp shift from war premium to ceasefire discount, but prices remain elevated near 96 dollars after peaking at 118, leaving room for reversal as the blockade takes effect. Goldman Sachs expects Brent to average above 100 dollars if disruptions persist. 

Gold briefly rallied on a weaker dollar and easing inflation concerns, then pulled back, ending the week modestly higher. It now sits at a crossroads, supported by safe haven demand if tensions escalate but pressured if higher oil reignites Fed hawkishness.

Conclusion

The macro narrative has sharply reversed, shifting from ceasefire driven optimism to renewed escalation, a US naval blockade, and a high stakes earnings week. While headline inflation reflects rising energy costs, softer core data gives the Fed limited room to stay patient, contingent on oil stability, with a move toward 110 dollars likely removing that flexibility.

 In the week ahead, geopolitics and any signs of renewed diplomacy will drive markets, while earnings will test corporate resilience. Expect continued headline driven volatility across oil, equities, rates, and the dollar.