Stock Take
US markets continue to rise despite ongoing US-Iran ‘tug of war’
Upbeat sentiment towards technology and AI, together with another strong week of corporate earnings supported US markets. The S&P 500 and Nasdaq Composite indices rose to new highs. Almost one third of companies in the S&P 500 have so far reported first quarter earnings, with the proportion reporting positive earnings surprises higher than average. Chip manufacturers were sought out by buyers, fuelling upbeat investor sentiment across the technology sector. Investors believe these companies will play a crucial role as the use of AI broadens and competition between the main players intensifies.
Carlota Estragues Lopez, SJP’s equity strategist, commented on the US market’s narrow reliance on technology since the war started. Traditional hedges such as fixed income and gold have not worked as well as they have historically. She added: “This greater uncertainty has meant investors have been reluctant to sell risk to avoid being surprised on the upside.”
But higher oil price is hindering Europe
However, Brent crude oil rose 17% over the week, its largest such move since the beginning of the war. With no progress on peace talks, and 10% of global oil supply bottled up in the Strait of Hormuz, demand continues to outstrip supply. A key beneficiary is the US, which produces about 16% of global oil output annually. The US government reported that exports of crude and petroleum products reached a record of almost 12.9 million barrels a day.
Weak regional economic data, limited exposure to technology and AI, as well as a dependence on energy supplies from the Middle East, resulted in European stock markets ending the week in negative territory. Benchmarks in Germany and France closed more than 2% lower, while the FTSE 100 fell 2.7%.
Germany’s 2026 growth outlook halved
The eurozone’s largest economy and its largest importer of energy, Germany, cut its annual economic growth (GDP) forecast for this year to 0.5%. In 2027, it was further reduced from 1.3% to 0.9%. While expected, these downgrades are disappointing, following the tentative 0.2% expansion in 2025 and following two years when the economy shrank. The energy shock following Russia’s invasion of Ukraine was a major culprit for Germany’s recent economic weakness. Compounding a poor week for Germany, its composite PMI survey, an important indicator of business activity, has also deteriorated in response to higher energy, fuel and transport costs.
It has been a similar picture in France, the eurozone’s second largest economy, where input prices for business have risen to a three-year high. So far, German companies have proved more aggressive than their French counterparts about passing these additional costs onto consumers.
UK motorists boost retail sales
The UK reported March retail sales 0.7% higher than in February, above expectations. At the same time, domestic consumer confidence has fallen to its lowest level in a year. A key reason for these counterintuitive readings is the jump in fuel sales as motorists anticipate further turmoil in pump prices and stock up. Since the start of the US-Iran war, average UK diesel prices (inc. VAT) have risen by 34%. On the same basis, petrol prices have risen 19%. Excluding this “stock-building” by motorists, retail sales were a more sedate 0.2%.
A new Fed chair
The US Justice Dept. announced that it was stopping its investigation into Jerome Powell, the current chair of the US central bank (Fed). Powell had indicated he would stay on as chair as long as he was under investigation.
Many commentators think the timing will help to smooth the path for Kevin Warsh, President’s Trump’s nomination to be confirmed as Powell’s replacement, whose term ends in May. This ends uncertainty about the transition and will be welcomed by markets.
A Fed governor during 2008’s global financial crisis, Warsh was regarded as an inflation hawk, cautious about cutting interest rates too early. Trump’s publicly stated preference for the Fed to lower interest rates seem at odds with Warsh’s previous comments on inflation. However, Warsh has recently indicated that there is room for US interest rates to come down from current levels, helped by productivity gains from AI.
Wealth Check
SJP backs government campaign to get Britain investing
A nationwide campaign has been launched to highlight the benefits of investing, fronted by ‘Savvy the squirrel’.
Invest for the Future is a multi-year campaign led by the UK trade body, the Investment Association (IA), and backed by government as well as a wide range of UK financial services firms, including St. James’s Place.
Research by the campaign shows seven million adults in the UK hold at least £10,000 in cash savings1. But almost half (44%) of savers have no equity-linked investments. This is despite the fact cash holdings have their own drawbacks. High inflation can erode the value of cash over time, particularly when savings interest rates are low.
The campaign hopes to break down some of the barriers to investing by getting more people talking about how it works, and debunking myths and fears about the risks.
It will seek to make the benefits of long-term investing clearer, helping people to build confidence over time. The hope is that this in turn could lead to a cultural shift in attitudes towards investing.
Source
1Opinium research among 4,000 UK adults conducted between 7 April to 12 April 2026.
Future of Pension Schemes Bill at risk over mandation powers
The future of the Pension Schemes Bill has been thrown into doubt following another rejection in the House of Commons last week.
While both houses broadly agree on most aspects of the legislation and its intended benefits, disagreement remains over the government’s proposed mandation powers. These would allow government to allocate large portions of retirement savings into UK private market investments.
Members of the House of Lords have raised concerns that such powers could be used to steer pension assets into projects that would benefit the government, rather than acting in the best interest of savers.
The issue has been debated and passed back and forth between the Commons and the Lords for many months. But the bill could fail if consensus cannot be reached before the end of the parliamentary session this week.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may therefore fall as well as rise. You may get back less than you invested.
Investing does not provide the security of capital associated with a deposit account with a bank or building society, as the value & income may fall as well as rise.
In The Picture
The below chart shows the energy component in UK consumer inflation during March and April going back to 2019. What stands out is 2022, when the invasion of Ukraine caused the previous sharp rise in energy prices. For 2026, the purple bar in March captures the first month’s effect of the Iran war, almost mirroring 2022. April’s 2026 data is not yet available, but a similarly dramatic rise could be on the cards.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
Past performance is not indicative of future performance.
The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
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SJP Approved 27/04/2026