The ceasefire reduced near-term tail risks around escalation, but it did not resolve the core macro issue: constrained flows through the Strait of Hormuz. Crude oil prices remained elevated, closing the month at $105 per barrel, sustaining inflationary pressures globally. Brent fell 3.5% in April, but remains 87% higher year-to-date. Major developed central banks kept rates on hold, waiting to see how uncertainty around the duration of the U.S.–Iran conflict feeds into inflation and employment. In the U.S., March CPI rose to 3.3% from 2.4% in February, while core CPI increased to 2.6% from 2.5%, slightly below expectations. The market is now pricing in no rate hikes in the US this year, after previously assigning a small probability of a hike, with the Fed holding rates at 3.50-3.75%. Fed chair nominee Kevin Warsh was approved by the Senate Banking Committee and is expected to be approved in a full Senate vote, with current Chair Powell confirming he’ll stay as a Governor once his period as Chair ends. Differing views at the April FOMC meeting also drew attention, with four dissents in total, including three opposing a dovish stance and favoring more hawkish language.  In Japan, the 6-3 vote split to maintain rates instead of hiking was viewed as relatively hawkish. ECB and BoE held rates, with debates about future hikes intensifying due to rising inflation and energy costs. In Latin America, Brazil was the only central bank to cut rates, lowering the Selic rate by 25bps to 14.5%.

Global fixed income performance was mixed in April, driven by renewed inflation concerns. U.S. yields remain higher than at the start of the year, with 2-year yields rising 9bps to 3.9% and 10-year yields up 7bps to 4.4% in April.  Yields also moved higher across developed markets as investors continued to price multiple hikes by year-end. In credit, risk-on sentiment after the ceasefire announcement tightened spreads and kept attention on strong balance sheets and attractive all-in yields. Emphasizing high-quality credit and short-to-intermediate duration still makes sense given uncertainty around fiscal dynamics and inflation. Even so, higher yields versus pre-conflict levels and widening policy divergence keep opportunities open for active fixed income investing. 

In equities, structural themes rather than cyclical swings did the heavy lifting. The global rotation away from concentrated U.S. exposure continued, especially into EM Asia, but with two filters. First: sensitivity to energy supply shocks, where Europe and parts of Southeast Asia remain more exposed due to reliance on imported oil and gas and smaller strategic reserves. Second: the presence of structural growth engines strong enough to offset an energy shock — most notably AI-driven earnings growth and ongoing corporate reforms in Asia. Those filters showed clearly in April. Emerging market equities rose 17.4%, led by earnings upgrades across parts of Asia. Taiwan and Korea, central to the semiconductor and memory supply chain, were the biggest contributors and are now up 51% and 94% year-to-date. The U.S. also stood out, with equities up 10.4%, their best month since November 2020, as earnings expectations rose. S&P 500 EPS growth is now expected at 21.9% for the year. In 1Q26 earnings, 85% of companies beat expectations, the highest since 2Q21, reinforcing that AI infrastructure spending is supporting tech earnings (especially semis) and broadening into other sectors. Banks are benefiting from AI-linked capital markets activity, while demand for electrical equipment is lifting industrials. With U.S. hyperscalers raising 2026 AI capex plans to $761 billion, the market’s focus is shifting to where that spend ultimately lands.

Looking ahead, attention will stay on energy disruption spillovers into supply chains disruptions, inflation, and earnings outlook. The ceasefire and talks offer a potential path to normalization, and investors should resist the temptation to time the headlines. Geopolitical risk premia can flood into markets swiftly, but they often recede just as fast. Staying diversified across asset classes and regions with a long-term mindset remains the most credible strategy in the face of shocks. As conditions stabilize, pre-conflict structural drivers should reassert themselves: AI-led earnings growth in Asia, continued reform in places like Korea and Japan, and a broadening of U.S. leadership beyond mega-cap tech.