Markets spent the week looking for clarity as sentiment swung between caution and relief on changing headlines.
Read this article to understand:
- How markets reacted to headlines throughout the week
- The impact of energy prices, currencies and interest rate expectations
- Why signs point to underlying resilience
This week in markets unfolded in quick chapters, driven far more by headlines and shifting expectations than by company earnings or economic data. The focus was on what the conflict might mean for confidence, prices and growth.
The week began cautiously. Equity markets fell as investors stepped back from risk, particularly in the United States and Europe. Government bonds rallied as investors sought stability. When visibility drops, markets move carefully even if the underlying economy has not yet changed in a meaningful way.
As the week progressed, the tone softened. Reports suggesting the US administration might be open to winding down military action helped calm nerves. Equity markets steadied, especially in Europe, and bond yields drifted lower as US ten-year Treasury yields fell back from their 2026 highs of 4.40 per cent. This hinted that policymakers may try to avoid the most disruptive outcomes. Confidence remained fragile however, and sharp declines in parts of the technology sector at the beginning of the week showed how quickly optimism could give way to doubt.
Midweek delivered the most dramatic shift. Hopes the conflict could move towards a resolution sparked a relief rally. US equities surged, with the S&P 500 posting its best day since last May, up by 2.9 per cent, led by large technology stocks. Volatility dropped sharply as investors unwound defensive positions.
Concerns about weaker global growth also meant investors pared back expectations for interest rate rises. Since the conflict began, markets had worried rising inflation could push central banks to tighten further. Instead, markets increasingly priced in that central banks may have little room to raise rates further by the end of the year because growth is slowing.
That relief proved short lived. A highly anticipated speech from President Trump failed to provide a clear path towards de-escalation, and markets reversed. Equity gains faded, bond yields moved higher again and the dollar strengthened. Markets were trading headlines rather than fundamentals this week, and expectations can shift abruptly when clarity is lacking.
Resilience beneath the surface is notable. Despite sharp daily swings, global equities as of Thursday, April 2, were down by 4.8 per cent since the conflict began, but by only just over one per cent down since the start of the year in local currency terms. Given the uncertainty, those moves are relatively modest and suggest investors are attempting to distinguish between short-term disruption and longer-term damage.
Oil and gold reflected the same uncertainty. Oil traded in an intraday range between $99 and $119 during the week (between March 30 and April 2), underlining how sensitive energy markets remain to headlines. Gold rose as investors looked for protection and was up by over three per cent in the five days to April 2, in contrast to its performance over the past several weeks.
The key takeaway is balance rather than panic. Markets are nervous and highly sensitive to headlines, but they are not in crisis mode. Energy prices, interest rates and currencies remain central, so sentiment can turn quickly as news shifts. Volatility is likely to persist, but the broader picture is one of resilience, reminding long-term investors that markets can absorb uncertainty even when conditions feel unsettled.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 2, 2026.
