Fin-X Weekly 27th April 2026

Global markets extended the ceasefire rally before the Strait of Hormuz was once again blocked over the weekend. The IMF downgraded its 2026 growth forecasts, while highlighting downside risk stemming from the conflict.

Inflation re-accelerated across parts of Europe and in US producer prices as energy effects came through. Australian unemployment held steady, but consumer and business confidence both fell heavily. Chinese activity data beat expectations, led by GDP and industrial production, but retail sales and unemployment were softer.

This week’s main events include the Federal Reserve confirmation hearing, China’s prime rates, UK and Japanese inflation, European surveys, and the latest global PMIs. The global earnings season is also set to accelerate.

Risk assets extended the prior week’s ceasefire rally. Global equities rose solidly, credit spreads tightened, and volatility declined, as markets treated the two-week US–Iran ceasefire and the partial reopening of the Strait of Hormuz as a genuine, if fragile, de-escalation.

Global equities delivered a second consecutive week of strong gains as de‑escalation in the Middle East triggered a powerful relief rally, led by US tech, Japanese exporters, and European cyclicals.

In the US, the S&P 500 and Nasdaq Composite indices rose +4.5% and +6.8%, respectively, both reaching new record closing highs. Trading volumes remained relatively light, prompting commentators to question the conviction behind the move. Even so, the early stages of earnings season provided support, with bank trading revenues benefiting from the market volatility.

Oil and gold gave back part of their recent spike, although both remained elevated. The US dollar eased modestly against higher-beta foreign exchange, while commodity-linked currencies outperformed as risk sentiment improved.

Announcing the news on Truth Social on Friday, Mr Trump said the US naval blockade of Iran's ports and coastline would continue until the countries had reached an agreement to end the war. He posted, "THE STRAIT OF HORMUZ IS COMPLETELY OPEN AND READY FOR BUSINESS AND FULL PASSAGE, BUT THE NAVAL BLOCKADE WILL REMAIN IN FULL FORCE AND EFFECT AS IT PERTAINS TO IRAN, ONLY, UNTIL SUCH TIME AS OUR TRANSACTION WITH IRAN IS 100% COMPLETE. THIS PROCESS SHOULD GO VERY QUICKLY IN THAT MOST OF THE POINTS ARE ALREADY NEGOTIATED."

However, difficulties became apparent ahead of scheduled peace talks in Pakistan. Iran objected to the partial blockade and, after the market close on Saturday, fired on two Indian vessels and reimposed restrictions on traffic through the Strait of Hormuz. Israel also struck targets in Lebanon, weakening expectations of an imminent peace deal and reinforcing the fragility of the earlier rally.

The IMF updated its forecasts in Washington DC last week and said, “After withstanding higher trade barriers and elevated uncertainty last year, global activity now faces a major test from the outbreak of war in the Middle East. Assuming that the conflict remains limited in duration and scope, global growth is projected to slow to 3.1 percent in 2026 and 3.2 percent in 2027. Global headline inflation is projected to rise modestly in 2026 before resuming its decline in 2027. Slowdown in growth and increase in inflation are expected to be particularly pronounced in emerging market and developing economies.

“Downside risks dominate the outlook. A longer or broader conflict, worsening geopolitical fragmentation, a reassessment of expectations surrounding artificial‑intelligence‑driven productivity, or renewed trade tensions could significantly weaken growth and destabilize financial markets. Elevated public debt and eroding institutional credibility further heighten vulnerabilities. At the same time, activity could be lifted if productivity gains from AI materialize more rapidly or trade tensions ease on a sustained basis.”

The IMF’s updated baseline therefore kept a limited-conflict assumption at the centre of the global outlook, while placing greater emphasis on downside economic risks.

On the data front, inflation releases reflected the energy backdrop. Eurozone CPI re-accelerated sharply to +2.6% yoy, and German wholesale inflation rose to +4.1% yoy. In the US, producer price inflation also accelerated to +4.0% yoy, though this was below the +4.6% yoy consensus estimate.

In Australia, unemployment held steady at 4.3% in March, in line with forecasts. The labour market outcome was therefore stable on the surface, but confidence data weakened sharply. Westpac consumer confidence fell -12.5% in April, while March NAB business confidence dropped to -29, the weakest reading outside the pandemic and the 2008 financial crisis.

China’s quarterly data were firmer overall. First-quarter GDP rose +5.0% yoy, +0.2% above forecasts and up from +4.5% yoy in the previous quarter. March industrial production also beat expectations at +5.7% yoy.

However, the monthly details were less firm. Retail sales rose +1.7% yoy, below expectations, and the surveyed unemployment rate edged up by +0.1% to 5.4% when markets had expected a slight decline.

In the US, 8 of the 12 Federal Reserve Districts reported slight-to-moderate growth in the April Beige Book, while 2 reported slight-to-moderate declines. These were the first negative District readings since mid-2025. The conflict in the Middle East was the single most-cited factor across every District, described as "a major source of uncertainty that complicated decision-making around hiring, pricing, and capital investment, with many firms adopting a wait-and-see posture."

Federal Reserve speakers highlighted upside inflation risks from the war with Iran and signalled that rate cuts may be delayed or even reversed by hikes if energy‑driven price pressures persist. At the same time, the ECB reiterated its unconditional commitment to the 2% target and explicitly kept rate hikes on the table if the inflation spike proves persistent.

This week, every Group of Seven central banks - the Federal Reserve, European Central Bank and peers in Japan, the UK, and Canada - convenes, deciding monetary policy for about half of the world's economy. Rates are expected to remain unchanged, however, the inflation threat posed to oil supply stemming from the US-Iran conflict may influence this.

Additionally, global earnings season is set to ramp up this week. On Tuesday, the Senate Banking Committee will hold Kevin Warsh first confirmation hearing. Donald Trump’s nominee is likely to succeed Jerome Powell as Fed Chair. However, committee members have threatened to delay his confirmation unless the president drops all charges pending against Mr Powell.

China's commercial banks are expected to keep loan prime rates steady. There will also be UK and Japanese inflation figures, the ZEW and IFO surveys, and the latest flash PMIs from S&P Global.

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