North America
Last week, global markets posted strong gains despite conflicting headlines around Middle East tensions and a more hawkish-than-expected Federal Reserve tone, with the S&P 500 Index rising over 10% in April—its best monthly performance since November 2020. Large-cap stocks outperformed small caps, while value led growth, supported by a sharp rise in oil prices that boosted the energy sector, with West Texas Intermediate ending the week up more than 7% amid volatility. Earnings season was a key driver, with broadly strong results from over half of S&P 500 companies offsetting concerns about inflationary pressures from higher commodities. Among the “Magnificent Seven,” Alphabet Inc. surged on strong AI and cloud demand, while Meta Platforms declined after increasing AI spending and issuing $25 billion in bonds. On the policy front, the Federal Open Market Committee held rates steady but surprised markets with a hawkish tilt, as three members dissented against the easing bias and one supported a rate cut—the highest under Jerome Powell—while Powell also signalled he may remain on the Fed Board after his chair term, adding uncertainty. Treasury yields moved higher, pressuring investment-grade bonds, and heavy issuance weighed on credit markets, though sentiment improved late in the week, supporting a recovery in high-yield bonds as risk appetite returned.

Europe & UK
Last week, European markets were broadly flat, with the STOXX Europe 600 Index edging up just 0.10% as positive earnings momentum was offset by geopolitical tensions, including stalled U.S.–Iran negotiations and the continued closure of the Strait of Hormuz, which kept oil prices elevated and sentiment cautious. Among major indices, Germany’s DAX gained 0.68% and Italy’s FTSE MIB rose 1.24%, while France’s CAC 40 fell 0.53% and the UK’s FTSE 100 Index was slightly lower by 0.04%, with most exchanges closed for International Workers’ Day except London. The European Central Bank held its deposit rate steady at 2% but flagged rising risks to growth due to Middle East tensions and even discussed the possibility of future rate hikes. Economic data showed weakness, with the eurozone Economic Sentiment Indicator falling to 93.5—it’s lowest since 2020—driven by weak consumer confidence, though industrial and construction activity remained relatively resilient. In Germany, inflation rose to 2.9% year-over-year, mainly due to energy costs, while Spain’s unemployment increased to 10.83% in Q1 2026, despite remaining lower year-on-year. In the UK, the Bank of England kept rates at 3.75%, citing uncertainty over energy prices and rising inflation at 3.3%, while weak demand was reflected in retail sales hitting their lowest level since 1983 according to the Confederation of British Industry.

Japan
Last week, Japanese equity markets delivered mixed performance, with the Nikkei 225 declining 0.34% while the broader TOPIX gained 0.33%, as currency volatility and shifting monetary policy expectations drove sentiment. The Japanese yen strengthened sharply from multi-decade lows, moving from around 160 to 156.7 against the U.S. dollar, a move widely attributed to suspected intervention after officials signalled concern when the currency breached the key 160 level. On the policy front, the Bank of Japan kept its benchmark rate unchanged at 0.75% but delivered a hawkish message, with a 6–3 split showing rising support for further rate hikes and policy normalization. Governor Kazuo Ueda highlighted growing uncertainty, noting inflation pressures from supply shocks linked to Middle East tensions while growth remains weak, creating a difficult policy balance. Reflecting this, the BoJ raised its FY2026 inflation forecast to 2.8% while cutting its growth forecast sharply to 0.5%, pointing to a stagflation-like environment. Meanwhile, Japanese government bond yields rose, with the 10-year yield reaching 2.50%, as markets increasingly priced in tighter monetary policy ahead.