WeeklyWatch – Markets back in the fast lane

14^th April 2026

Stock Take

Markets find momentum from ceasefire news

A strong week for the S&P 500 saw it reclaim much of the ground lost since the Iran war began, with other markets also gaining momentum. The tech-heavy Nasdaq Composite rose by almost 5%. European markets bounced back, while Japan’s Nikkei 225 finished the period 7.2% higher.

Energy was the only sector to post negative returns, reacting to the 14% fall in the price of Brent crude during the week. Even after that drop, oil remained more than 30% above the level seen before the conflict started.

Overall sentiment was boosted last week by news of a two-week pause in hostilities in the Middle East, ahead of peace talks held over the weekend in Pakistan. But despite the optimism, the talks broke down and yesterday (13^th April) saw the US blockade Iranian ports and the latter threatening retaliation. The ceasefire agreement is hanging in the balance, with the previous closure of the Strait of Hormuz, Israel’s ongoing military action in Lebanon and the future of Iran’s nuclear programme remaining key sticking points.

Bonds unsettled as yields rose on Friday

Returning to the review of last week, we saw bond yields recover on Friday. The main driver was the release of US March inflation data, which reflected the impact of higher energy prices. Consumer prices rose 3.3% compared with March 2025 – the highest reading in two years and a marked increase from February’s 2.4%. Core inflation, which excludes the more volatile food and energy categories, rose by 2.6%.

Analysts had foreseen the uptick in inflation, with energy prices sitting more than 10% higher than a year earlier. Even so, the figures came in slightly better than forecast. Hetal Mehta, St. James’s Place’s chief economist, said:

“The impact of the energy price shock is still going to take several months to feed through, even if there is a rapid de-escalation and a resumption of supply.”

By contrast, US consumer sentiment data for April disappointed. It fell to a record low as households expect a sharp rise in inflation during 2027. That uncertainty may lead consumers to spend less just as businesses face higher energy costs. Questions are now being asked about whether unemployment could rise. Many investors believe stubbornly high inflation would make it harder for the US central bank, the Federal Reserve, to cut interest rates if the labour market weakens.

Light at the end of the tunnel for China deflation

Many economists see deflation, where prices keep falling, as a bigger challenge for governments and central banks than inflation. When goods become cheaper month after month, people often delay purchases. Why buy a new car or household appliance today if it may cost less next month? As demand softens, manufacturers may cut output. Their debt levels stay the same, while the incentive to recruit also weakens.

Central banks have fewer tools available in a deflationary environment. In most cases, interest rates can only be cut to zero. Although on rare occasions, rates have moved below zero – in 2019, the European Central Bank lowered rates to -0.5% in an effort to encourage spending.

China has now announced that the three-year producer price deflation ended in March 2026. Since 2022, fierce competition in manufacturing, combined with weakness in the property market and subdued consumer confidence after the pandemic, had pushed prices lower.

The turning point has been the sharp rise in energy and commodity prices since the Iran war began. As a result, the producer price index rose 0.5% in March compared with the same month in 2025. In February 2026, the equivalent figure was -0.9%.

While the March rebound had been expected, hopes now rest on it continuing. Energy prices have eased from the highs seen during the first month of the war, and both government and businesses will want that to feed through into consumer behaviour. Rather than delaying spending in the belief that prices will keep falling, the ideal outcome would be for households to bring purchases forward before the war’s effect on costs pushes prices higher.

Wealth Check

HMRC’s warning over pension tax avoidance schemes

HM Revenue & Customs (HMRC) are urging workers to “check before you dip” into private pension savings, warning that schemes claiming to offer better tax efficiency may in fact be pension tax avoidance arrangements. HMRC say those involved could face much higher costs and unexpected tax bills.

The caution forms part of a wider campaign aimed at raising awareness of fraudulent tax avoidance schemes.

People who fall victim to – or who choose to take part in – such schemes may face losses through penalties and interest on unpaid tax. This would come on top of any fees charged by those promoting the scheme.

HMRC have also focused on contractors and agency workers, amid concerns that growing numbers are being drawn into tax avoidance structures marketed through complex pay arrangements.

These schemes are often linked to umbrella companies or agencies. Many are not compliant with UK tax rules, leaving workers exposed to charges and interest on unpaid tax.

HMRC’s tell-tale signs of poor tax advice:

• If it sounds too good to be true, it probably is.
• Check payslips and contract terms to make sure the correct income tax and National Insurance are being paid.
• Research any tax refund company or tax adviser before using them.

FCA asked to rethink investment risk warnings

The Financial Conduct Authority (FCA) have been urged to review the rules around how investment risk warnings are shown to retail investors.

A government-commissioned review led by the Investment Association, and supported by St. James’s Place, found that current warnings, including the prominent “capital at risk”, may discourage long-term investing.

The review also found that repeated use of such warnings can reduce engagement, particularly among people looking for reassurance and clarity when considering investments.

St. James’s Place have played a central role in shaping the guidance published in the Investment Association’s report as part of the technical expert group.

Recommendations include using warnings that give more context and a fairer picture of both risks and potential rewards. Firms should also have greater flexibility over timing and prominence, depending on where a customer is in their decision-making journey.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Source:

Bank of England, April 2026

In the Picture 

Eyeing up a staycation? Europe’s airline industry have warned that regional jet fuel supplies may only last a few more weeks unless flows resume. Indeed, some regional airports in Italy have already introduced refuelling restrictions.

Normally, up to half of Europe’s jet fuel passes through the Strait of Hormuz, but traffic through the route has largely stalled. Pressure is being increased by the approaching summer holiday season, when demand typically peaks, as well as damage to refining infrastructure in Saudi Arabia and Gulf states.

Even if hostilities come to an end, jet fuel prices are unlikely to fall at a corresponding rate. Repairing and restarting damaged refining capacity is expected to take months. In the meantime, alternative supply routes will be needed, bringing added complexity and likely higher air fares for some time.

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SJP Approved 13/04/2026