WeeklyWatch – Clearer horizons for markets?
21st April 2026
Stock Take
Another week of share gains
For a third consecutive week, markets rose. Friday’s returns were boosted by the announcement from the Iranian foreign minister that the Strait of Hormuz was now “completely open” to shipping. The US dollar eased, plus there was a fall of 9% in the price of Brent crude oil on the hope that cheaper energy will help ease inflationary pressures. However, yesterday (20th April), the Strait of Hormuz was closed again, and oil prices were up around 6%. It continues to be a fast-moving situation – markets will be watching to see if further Iran–US peace talks in Pakistan come to fruition.
When it comes to interest rate policy, the Chief Economist at St. James’s Place, Hetal Mehta, said:
“Central banks are obviously conflicted when it comes to supply shocks. At the moment, markets are pricing in broadly no change in interest rates by the US Federal Reserve over the rest of this year. For the Bank of England, only one 0.25% hike is priced in, but I think the bar to hiking is relatively high.”
US banks achieve record Q1 results
Positive results from numerous US financial companies aided markets as US earnings season started up last week. Results in this sector are often seen as a barometer of both corporate and household confidence. Financials are expected to deliver one of the strongest quarterly earnings in the S&P 500.
This encouraging growth is set to surpass expectations that were set at the end of last year. The volatility caused by the Iran war has significantly benefited investment banks. One such example is JPMorgan Chase, the largest bank in the US: they recently revealed record trading revenues of US$11.6 billion during the period.
The fees earned in investment banking increased by almost a third, as corporate dealmaking stayed strong. Goldman Sachs and BNY Mellon were other banks that also exceeded estimates.
The heads of Bank of America and JPMorgan Chase both suggested that while consumers are paying more for petrol, the knock-on effect hasn’t reached household expenditure. For US households, the spending on petrol is relatively low, accounting for between 3% and 5% of monthly household outgoings. Oil prices are below US$100 per barrel again, and it’s hoped that the current ceasefire will be extended and the Strait of Hormuz will be opened before existing stocks are exhausted. This will assist in capping inflationary pressures and the need for interest rate increases.
Further economic downgrades for the UK
It’s been three weeks since the Organisation of Economic Cooperation and Development (OECD) downgraded the 2026 outlook for the UK economy, and now another multilateral agency has adopted a similar stance. The impact of the Iran war hasn’t been calculated in costs for the UK economy yet, but the International Monetary Fund (IMF) stated that the UK would likely be hit the hardest out of any major economy as a result of the Iran war. Both agencies opted to cut their projections for 2026 UK economic growth by 0.5%. The OECD’s revised figure now stands at 0.7% and the IMF’s is 0.8%.
While the degree of the IMF adjustment to UK growth in 2026 was relatively high, it’s on a similar growth trajectory to Germany. It’s expected that the UK will grow faster than Italy – their economy is only projected to expand by 0.5% for both 2026 and 2027.
But why is the UK projected to be so severely affected compared to other countries? Our vulnerability lies in our increasing reliance on imported energy. Against the backdrop of a more than 30% rise in the price of oil and natural gas since the war began, UK government data shows that 43.8% of all the energy used domestically was imported in 2024, a 3.4% increase on the year before.1 In contrast with this was domestic energy production, which was at a record low over the same time period, having dropped 68% since its peak in 1999.
The tech comeback
Multiple companies in the US tech sector outperformed during the course of the week, boosting the S&P 500 past its previous all-time high set in January 2026. The tech-focused Nasdaq Composite index also broke another record and delivered 12 consecutive days of “higher highs”. So, what’s changed?
It was a bearish story at the start of the year for the tech sector, particularly with investor anxiety surrounding the large amounts of spending for AI and whether it could ever make a meaningful profit. Tech firms are budgeting half a trillion dollars on capital expenditure in 2026. Simultaneously, there’ve been concerns that AI could replace many of the services sold by software companies.
Investor sentiment has become more optimistic lately, fuelled by the hopes of a settlement between nations at war in the Middle East. A sell-off for tech stocks started at the end of October 2025, and valuations in the sector have had a strong rebound since the start of April.
This momentum has been helped along by positive updates from major players across the sector. Quarterly results from ASML, a Dutch company that manufactures chipmaking machines (and Europe’s most valuable company), and Taiwan Semiconductor Manufacturing Co. (TSMC), a key supplier of chips to industry giants such as Nvidia and Apple, show that industry demand is strong. Both companies also increased their full-year forecasts.
Source
1Department for Energy Security and Net Zero (2025). UK Energy in Brief. Available at: https://assets.publishing.service.gov.uk/media/688890c3a11f859994409132/UK_Energy_in_Brief_2025.pdf (Accessed: 20 April 2026).
Wealth Check
Is it the end for salary sacrifice pension schemes amid Reeves’ pension raid?
Recent reports have indicated that many companies are now looking to scrap their salary sacrifice pension schemes for their employees.
This comes after Chancellor Rachel Reeves looks to bring in a cap on the amount workers can put in a pension without paying National Insurance contributions (NICs). From April 2029, there’ll be a £2,000 annual cap on the amount of pension contribution individuals can make out of their gross salary that will be exempt from NICs.
In a pensions salary sacrifice scheme, an employee’s contract is changed to reduce their salary in exchange for increased contributions, made by the employer, into a pension. The employee reduces their income tax liability as well as saving on NICs, while employers also get relief on their NICs.
The changes that are coming into effect from 2029 mean that employees (and employers) will have to pay NICs on any salary sacrifice pension contributions over £2,000 per year. Overall, this makes the perk less desirable for both parties.
It’s been argued by experts that introducing the £2,000 cap would have a negative long-term effect on pension saving. The latest reports suggest that many companies are looking to end salary sacrifice before the change is put into place.
The Office for Budget Responsibility (OBR) has suggested the impact of the salary sacrifice cap would affect more people than expected and not just those in higher tax rate bands.
The OBR estimates that the rule change will bring in £4.7 billion in revenue for the government in the 2029/30 tax year.2
Government looks to retain mandating powers from Pension Schemes Bill
The government are one step closer to finalising the Pension Schemes Bill. This will give them the power to direct how pension schemes invest savers’ money and target different asset classes.
The House of Commons approved an amended version of the bill last week, which sees the government set to retain the powers set out, with refreshed wording to draw closer to last year’s Mansion House Accord.
As part of the Mansion House Accord, several UK pension providers pledged to invest at least 10% of their defined contribution schemes into private markets, with the aim to unlock £50 billion for the UK economy by 2030.
The House of Lords originally opposed this part of the bill, saying the government will have too much power to direct pension schemes in how they invest workers’ pensions.
The bill returned to the House of Lords on 20th April for the latest amendments to be considered.
The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.
Source
2Office for Budget Responsibility – February 2026
The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2026. FTSE Russell is a trading name of certain of the LSE Group companies.
“FTSE Russell®” is a trademark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
© S&P Dow Jones LLC 2026; all rights reserved
Source: MSCI. Certain information contained herein, including without limitation text, data, graphs, charts (collectively, the “Information”) is the copyrighted, trade secret, trademarked and/or proprietary property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or any third party involved in making or compiling any Information (collectively, with MSCI, the “Information Providers”), is provided for informational purposes only, and may not be modified, reverse-engineered, reproduced, resold or redisseminated in whole or in part, without prior written consent.
Source: Bloomberg. BLOOMBERG®” and the Bloomberg indices listed herein (the “Indices”) are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the Indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by the distributor hereof (the “Licensee”). Bloomberg is not affiliated with Licensee, and Bloomberg does not approve, endorse, review, or recommend the financial products named herein (the “Products”). Bloomberg does not guarantee the timeliness, accuracy, or completeness of any data or information relating to the Products.
SJP Approved 20/04/2026