Your April 2026 market update: markets rally but inflation fears linger

This is part of our monthly series. Catch up on last month’s summary here: Your March 2026 market update: the financial fallout from the Middle East conflict

‍

What a difference a month makes.

Stock markets dipped notably in March as the US and Israel’s joint military action in Iran spooked investors.

You might’ve seen the impact of these moves reflected in your pension balance over the last couple of months. PensionBee’s plans saw low growth or slight falls in the first quarter of 2026, as markets came to terms with this period of uncertainty.

Yet fast forward to the end of April, and markets are seemingly unscathed by those dips at all.

Major world stock indices bounced back up last month, with some even returning to above their pre-war levels. Despite the conflict in the Middle East continuing, investors seem to be behaving as if everything is back to normal. At the very least, they're being remarkably calm as events unfold.

However, while markets look steady, economic data might show signs of potential headwinds to come this year.  

Here’s what happened to investment markets in April.

The headlines: record highs amid global uncertainty

Having fallen 5.1% in March, the US’s S&P 500 reached yet more all-time highs, on both 27 and 30 April.

It was a similar story in Asia. Japan’s Nikkei 225 also hit a record high on 27 April. 

Likewise, Korea’s KOSPI closed at an all-time high on the 29th. That’s a continuation of stellar performance so far in 2026, finishing April up by more than 50% year-to-date. 

Meanwhile, China’s economy beat growth expectations, with its economic output expanding by 5%. 

Combined with Korea's remarkable rise, this has helped the MSCI Asia Ex Japan to climb above its pre-war level too, reaching a record-high on 27 April.

UK and European markets were less buoyant. The FTSE 350 and MSCI Europe Ex-UK finished up from where they started in April. However, both remain down from pre-war levels.

That’s despite positive economic news in the UK, with the economy growing by 0.5%, a faster rate than expected. Plus, January growth data was revised from 0% to 0.1%.

The Iran war and energy prices push inflation to top of mind

April market performance was perhaps more positive than expected across the board. However, the war in Iran and the risk of rising inflation remain a concern.

You’ll no doubt have seen energy prices rising. The cost of heating oil, petrol, and diesel have all increased, as the Middle East conflict has led to oil and gas supplies constricting. 

We saw these price rises reflected in the latest inflation data in some of the world’s largest economies, as shown in the table below:

The problem is that so many industries rely on oil and gas, at least in part. So, rising energy prices tend to have a knock-on effect on other areas.

There’s a wider concern that these figures don’t yet fully represent the conflict’s impact on prices, and inflation might yet climb higher.

Higher inflation could harm consumer spending as individuals look to tighten their belts. We might see a lack of activity filter through into markets moving forwards, limiting business’s income and their growth as a result.

Central banks respond to inflation concerns

Inflation concerns also influenced various central banks’ interest rate decisions.

Before the start of the Iran war, most markets had priced interest rate cuts into their expectations. 

Central banks usually increase rates when inflation is too high, and cut them when it’s lower to encourage spending.

But the Middle East conflict and restricted energy supply has changed that. The war has forced up energy prices and taken inflation with them.

This led central banks to abandon those expected rate cuts. Instead, we saw holds at:

• 3.75% from the UK’s Bank of England;
• 3.5% to 3.75% from the US’s Federal Reserve;
• 2% from the European Central Bank for its main deposit rate; and
• 0.75% from the Bank of Japan.

Markets are now pricing in interest rate rises in 2026. These decisions could affect markets throughout the rest of the year.

A mixed bag for US big tech earnings reports

Analysts kept a close eye on Q1 earnings for six big US tech firms. 

First, Tesla reported on 22 April. Amazon, Meta, Microsoft and Alphabet then all reported on 29 April, with Apple following up on 30 April. 

These are six of the so-called ‘Magnificent Seven’, with the last one, Nvidia, reporting in May.

This group of companies is particularly important. Their valuations make up more than 30% of the US market, and a considerable part of the world markets as a result.

Most earnings reports are an interesting indicator of how a company is performing. But this set of results can influence entire markets.

Broadly speaking, results were positive. Alphabet, Amazon, Microsoft, and Apple all topped earnings and revenue expectations. Tesla’s earnings beat expectations, although revenue came in below.

Meta, the parent company of Facebook and Instagram, was the outlier which saw the most mixed reaction. 

Revenue and net income both increased. However, the company also announced expensive spending plans - largely for AI infrastructure - and mass layoffs of around 10% of its workforce.

AI seemed to be the big takeaway from this round of earnings reports. These companies are at the forefront of building AI products and infrastructure. Investors understandably want to make the most of that trend.

However, concerns about an AI bubble - in which these businesses are overvalued - persist. And, with so much of the market concentrated in these companies alone, there are concerns that markets could fall if the bubble were to burst.

Whether that comes to pass remains to be seen. Even so, April will go down as a strong month for tech and the US market as a whole.

Gold continues to defy expectations

Amid uncertainty in geopolitics and AI, gold has moved unpredictably.

Gold is traditionally seen as a ‘safe haven’ when markets are volatile. Yet, that hasn’t happened this time. 

Since reaching a record high in January, investors haven’t reacted to bad news by flocking to the metal as we’ve seen in the past.

Instead, we saw prices fall since the start of the war. When the US-Israeli strikes began on 28 February, gold traded at £3,981.24 per troy ounce, a weight measure specifically for precious metals. 

But by 1 April, prices had softened to £3,549.83. With a few peaks and troughs along the way, they finished the month even lower, falling to £3,399.10 on 30 April.

It could be that the previous rally has made these prices seem comparatively lower - 12 months ago on 30 April 2025, gold was trading at £2,450.39.

Even so, it’s interesting to see that gold hasn’t performed as it historically might’ve done.

Risk warning

As always with investments, your capital is at risk. Past performance is not an indicator of future performance. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.