April 2026 Market Review: Equities Surge on US-Iran Ceasefire

April 2026: Powerful Market Moves

If March 2026 was defined by fear due to the energy shock, the inflation revival and the return of stagflation anxiety, then April in contrast was defined by relief. A US-Iran ceasefire, announced in the first week of the month, acted as the starting pistol for one of the most powerful monthly rallies in recent memory. The S&P 500 rose 10.4%, its best month since November 2020. The Nasdaq surged setting fresh all-time highs. Technology stocks roared back, and investors who held their nerve through the tough first quarter found their patience amply rewarded.

The mood, however, was not uniformly celebratory. Inflation remained elevated, gilt yields broke above 5% for the first time since 2008, and central banks on both sides of the Atlantic refused to signal any imminent return to rate cuts. The ceasefire extended the reprieve, but it did not resolve the deeper questions about energy, inflation, and the path of monetary policy that dominated the first quarter.

The Ceasefire That Changed Everything

On 8 April, President Trump announced a two-week suspension of planned strikes on Iranian infrastructure, contingent on Iran agreeing to the safe reopening of the Strait of Hormuz. Markets did not wait for the details. European and US equity futures surged more than 2%, Brent crude fell sharply from above $100, and seven consecutive positive sessions on the S&P 500 followed, effectively recovering the entire first quarter's losses in a matter of weeks. By 22^nd April, Trump extended the ceasefire indefinitely to allow further peace talks, carrying the rally into month-end. 

The Global Rally: Equities Surge, Technology Leads

The S&P 500 performed excellently in April, its best month since November 2020, closing above 7,200 for the first time. The Nasdaq led the way, up 15.3%, with technology the standout sector, advancing more than 20% and accounting for nine of the top ten S&P 500 performers for the month. Earnings season added fuel to the rally, Alphabet beat revenue expectations and raised its 2026 capex guidance to $190 billion, while Caterpillar and Eli Lilly also beat forecasts. Not everything rallied; Meta and Microsoft both fell on AI capex concerns, but the broad message was one of renewed confidence in US growth assets.

European indices fared well on the ceasefire news, with Germany's DAX jumping 4.9% on the day of the announcement and France's CAC 40 gaining 3.6%. The FTSE 100 lagged, however, caught in the same structural trap as March but in reverse. Having been supported by high oil prices in early 2026, the index was dragged back in April as BP and Shell sold off sharply when Brent retreated. Airlines, manufacturers, and consumer companies bounced, but the net effect for the UK index was modest relative to its European peers.

Indices chart

Fixed Income: Gilt Yields Hit a 17-Year High

While equities celebrated, the fixed income market told a more sobering story. The 10-year gilt yield broke above 5% in April for the first time since 2008, a level that would have been considered extraordinary as recently as eighteen months ago, when the Bank of England was cutting rates toward what many expected to be a 3% floor.

The move reflected a fundamental repricing of the UK rate path. Before the US-Iran conflict erupted, the Bank had projected CPI returning to its 2% target as early as April 2026 and markets had been pricing further rate cuts through the year. Both assumptions are now firmly off the table. UK CPI stood at 3.3% in March, its highest reading in years, and the MPC's own projections now see inflation trending higher.

The MPC voted 8-1 to hold Bank Rate at 3.75%. Governor Andrew Bailey described the outlook as "the most difficult combination" of economic effects, rising prices alongside weakening growth. Markets are now pricing more than a 50% probability of a hike in June, a complete reversal from the rate-cut expectations that prevailed just two months ago.

The Federal Reserve also held at 3.50–3.75% in what was Jerome Powell's final FOMC meeting as Chair, with US inflation at 3.3% and the CME FedWatch tool assigning less than a 5% probability to a cut at the June meeting.

The consequence for gilt investors was continued pain. Higher yields mean lower prices on existing holdings, and with duration risk clearly elevated, government bond allocations delivered negative returns for the second consecutive month. Short-dated bonds continued to outperform longer maturities, as investors seek to limit their exposure to further yield rises while still earning an income that now comfortably exceeds inflation expectations on shorter dated holdings.

10 Years Glit Yield chart

The Portfolios

April was a materially better month for the Smart Portfolios, with US equity the dominant driver of returns across all five risk profiles. Higher-risk portfolios captured the most from the equity surge. Fixed income remained a slight headwind with gilt yields continuing to rise. Yet emerging market debt and corporate credit fared well in April.

The Smart Portfolios provide professionally managed, risk-profiled exposure using BlackRock's iShares ETFs across five options from Conservative to Aggressive, matching different time horizons and risk tolerances. Automatic rebalancing maintains target allocations, while costs significantly below traditional active funds compound meaningfully over time. The portfolios are available in ISA and SIPP structures for tax efficiency. 

Smart Portfolio Performance chart

Sources: Bloomberg, FTSE Russell, Bank of England, YCharts, Goldman Sachs Asset Management, CNBC, S&P Global Market Intelligence, MSCI, LSEG, ONS (all data as at 30 April 2026)

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