Solid growth and earnings met renewed geopolitical reality as energy prices climbed and markets reassessed their recent complacency.
Read this article to understand:
- What drove markets this week
- How company earnings supported US stocks despite worries
- Why markets are now positioning for a world where tensions may last longer
The week began with markets digesting renewed instability around the Strait of Hormuz, after Iran abruptly reversed its statement that shipping would reopen. The Strait effectively closed again within 24 hours, undermining confidence that the recent two‑week ceasefire would hold. Oil prices turned sharply higher, with Brent crude jumping by more than five per cent to around $95 a barrel, reversing much of the previous week’s fall. Markets were forced to reassess how optimistic they had become about a swift geopolitical resolution.
Early in the week, equities held up reasonably well. The S&P 500 rose by more than one per cent on Monday, closing above its pre‑conflict level for the first time, and European shares also advanced. Government bond yields fell and credit markets tightened, signalling that investors were still leaning towards a benign outcome. That calm, however, proved fragile.
As the week progressed, negotiations between the two sides faltered and oil prices continued to climb. By mid‑week, Brent had pushed to above $100 a barrel, and by Friday it was trading closer to $106. Each rise fuelled concerns that energy costs would reignite inflation just as it had been easing. Expectations reflected this shift, with measures of expected inflation over the next year jumping to above three per cent in both the US and Europe, undoing months of progress.
Equities began to wobble. US markets slipped modestly, but the moves were more pronounced in Europe, where there is greater reliance on imported energy. The Euro Stoxx 50 fell by close to two per cent for the week to Friday morning. European business surveys slipped into contraction, while prices paid by firms rose at their fastest pace in over a year, reviving uncomfortable talk of slow growth and stubborn inflation. Bond markets reacted too. US ten‑year yields climbed back to above 4.3 per cent, and investors pushed back expectations for interest rate cuts.
One striking feature of the week was how narrow market leadership became. Technology stocks, particularly semiconductor companies, continued to push higher. The Philadelphia Semiconductor Index rose for a sixteenth consecutive day and is now up by around 33 per cent since the start of April.
Company earnings helped explain why markets did not fall more sharply despite rising oil prices and geopolitical tensions. In the US, the S&P 500 briefly reached a new high earlier in the week, supported by results that were generally better than feared. Technology stood out again, with Intel providing a late boost after issuing stronger sales guidance, sending its shares up by around 20 per cent after hours. Elsewhere, the picture was more mixed. Results from companies such as Tesla and IBM were treated more cautiously, particularly where higher spending or weaker revenues raised questions about future profits. More broadly, firms flagged rising input and energy costs, suggesting margins could come under pressure if oil prices remained high.
By Friday, the mood was noticeably more cautious, with Asian markets struggling overnight and volatility edging higher. Investors are not panicking, but they are clearly repositioning for a world where geopolitical tensions may last longer and inflation risks remain uncomfortably alive.
The key lesson from the week is that resilient economic data and company fundamentals continue to provide support, even in an uncertain environment. For now, markets are balancing solid underlying demand against renewed geopolitical and inflation pressures, a reminder that markets can climb walls of worry, but only so long as those walls do not keep getting taller.1
Past performance is not a reliable indicator of future results.
References
- Source of all the data for this article: Aviva Investors and Bloomberg. Data as of April 24, 2026.
