Markets Rebound, But Uncertainty Continues

Markets rebounded in April, even as uncertainty around the direction, duration and magnitude of the Middle East conflict remained entrenched. As measured by the MSCI ACWI ex-USA Index, the market bounced nearly 10%, pulling markets back into positive territory for the year to date.

Much of the world’s focus remained on the conflict between the US and Iran—particularly, from an economic perspective, the openness (or lack thereof) of the Strait of Hormuz, through which many trade goods pass. Oil prices were understandably quite volatile during the month as the US and Iran first announced a ceasefire, the US announced its own blockade of the Strait, negotiations fell apart, and the Strait was declared open by the US—though Iran contradicted the report and, as of this writing, the Strait remains mostly closed. As the news broke, oil prices responded, with a barrel of oil reaching as high as $126 near the end of the month.

Naturally, as oil prices go, so will inflation rates around the world, as transportation and intermediate goods prices respond. The European Central Bank, Bank of England, Federal Reserve and the Bank of Japan held rates during the month; however, all issued more hawkish guidance and indicated continued inflationary pressure from higher energy prices could ultimately force benchmark rates higher. Indeed, US inflation has already risen, hitting a two-year high in March at 3.3%. UK inflation likewise notched 3.3% in March, and, as the month concluded, April inflation in the EU came in at 3%, its highest level since September 2023. The Bank of Japan is broadly expected to resume raising rates in June as it continues normalizing monetary policy following decades of a low-inflation, low-growth economic malaise.

Constrained oil flows from the Middle East are having downstream impacts elsewhere, too: In Argentina—which has struggled with high inflation and whose libertarian president, Javier Milei, has embarked on an ambitious program to rein it in—there are some signs higher oil prices could precipitate an economic boost as the country’s oil industry gains traction. Also in Latin America, Venezuela’s oilfields resumed production as Spanish company Repsol resumed operational control of its assets in the country. On the other hand, China’s economy, which started the year on a stronger-than-expected note as it expanded 5% year over year in Q1, is expected to feel the impact of higher oil prices on already tight industrial companies’ margins in Q2. Indeed, early in April, China saw the first rise in the producer price index, which measures wholesale prices, since September 2022—contributing to some optimism the country’s ongoing struggle with deflationary pressures may end but simultaneously prompting some concern about the country’s near-term growth prospects.

Other downstream impacts include the United Arab Emirates’ announcement it would leave OPEC after nearly 60 years’ membership, a move that may weaken the oil cartel and Saudi Arabia’s role as its leader. The UAE had indicated it is frustrated with OPEC, which has limited the country’s oil production in a bid to maintain prices and some members of which have taken different views of the conflict with Iran. The UAE, which has been on the receiving end of many of Iran’s missile strikes, has come down firmly on the side of the US and Israel in the conflict. Accordingly, the UAE also withdrew from OPEC+, which includes Russia, ostensibly given the latter’s support for Iran.

Elsewhere, the full impact of the war seems like it is still to be felt, with the US notching solid economic growth in Q1. US GDP grew 2% in Q1 as private investment soared at a nearly 9% annualized rate as the AI boom continues apace—and showing few signs of reversing course in the near term.

As we passed the first anniversary of President Trump’s Liberation Day tariff announcement, trade news in the month was relatively muted, though as April started, Trump announced major tariffs of up to 100% on pharmaceutical companies who have yet to increase their US investments or cut drug prices. The president also threatened to tear up the trade deal with the UK as tensions simmer between the two countries over the war in Iran. To date, UK Prime Minister Keir Starmer has refused to join the war and open the Strait of Hormuz, which provided the backdrop for King Charles’ state visit late in the month, during which he attempted to smooth relations over. With Starmer mired in political controversy at home, it remains to be seen whether the monarch’s efforts will bear meaningful fruit.

Regionally, after leading the way down in April, Asia and Pacific markets bounced back most, rising over 13%. Korea (+38%), Taiwan (+26%) and Japan (+9%) were the biggest contributors to the region’s gain. India (+9%) and China (+4%) also contributed positively. There were no major detractors in the region. Europe also contributed positively to the market’s overall rise, up north of 7% in April. Among the region’s major contributors were the UK (+5%), Germany (+9%), France (+6%) and Switzerland (+7%). Norway was the sole country in the red, declining a modest 1%.

The Middle East and Africa was up 4% tied to relative strength in Israel (+10%) and the United Arab Emirates (+7%). Saudi Arabia was the lone decliner regionally, falling less than 1%. Latin American markets rose a modest 3%, with Brazil the biggest positive contributor, up 4%.

Exhibit 1 – April Returns for Major Markets (USD)

Source: FactSet, data as of April 30, 2026.

All sectors were in the black in April, with the biggest positive contributions from information technology (+27%), financials (+9%) and industrials (+11%). The most tepid returns came from health care (+1%) and energy (+2%). April’s sharp bounce back from March’s decline highlights the challenges volatile geopolitical and market environments can pose to investors who lack a disciplined, rigorous approach. Such times make the case for a philosophy firmly rooted in deep, bottom-up research with an eye to long-term investments. A five-year time horizon provides sufficient time for an investment thesis to play out and for a company to overcome near-term noise which can disproportionately negatively impact results at even robust companies who are otherwise executing well. As such, however the news unfolds from here, we will remain diligent in seeking to identify and invest in high-quality, undervalued companies which we believe are poised to do well over the long term.