“Speedy Recovery in Markets”
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Market Mood
Global markets rebounded swiftly after the US–Iran ceasefire, with US equities erasing losses and the S&P500 and NASDAQ reaching record highs. Technology stocks led the recovery, supported by resilient earnings and strong sales outlooks from ASML and TSMC. In contrast, oil-importing nations and luxury goods companies, such as Hermes, lagged due to weaker demand and reduced tourism.
Corporate earnings expectations in the US remain buoyant, even revised upward since the conflict began, providing support to investor sentiment. However, fixed income markets tell a different story, with US 10-year yields elevated on inflation concerns and reduced expectations of rate cuts later this year.
The episode underscores the difficulty of timing rebounds, the importance of maintaining exposure, and the sector-specific opportunities and risks that arise during geopolitical volatility. While risks remain if the ceasefire falters, US corporate earnings continue to underpin market strength, and sector divergences highlight both caution and opportunity.