21 April 2026
Last week, Bank of England ("BoE") Governor Andrew Bailey reiterated that the central bank is in no rush to raise interest rates, arguing that it is too soon to judge the economic impact of the conflict in Iran. The energy price surge triggered by the conflict has caused a major supply shock, which Bailey and Monetary Policy Committee (“MPC”) member Megan Greene suggest is best addressed at the source, not via monetary policy, pending hard evidence of second-round effects. Consequently, markets now expect 1-2 rate hikes by year-end, down sharply from four.
In equities, the FTSE 100 index finished the week buoyed by hopes for peace in the Iran conflict. Chancellor Rachel Reeves announced energy relief for manufacturers under the British Industrial Competitiveness Scheme, cutting electricity bills by 25% for over 10,000 businesses from April 2027 to boost growth and competitiveness. This follows heightened concerns over public finances, which led Reeves to cap defence spending increases at £2.5 billion a year despite criticism over national security. Separately, the UK plans a reset of European Union relations, with Starmer planning legislation to adopt single market rules without a normal parliamentary vote; the government is pursuing agreements on food safety, carbon trading and youth mobility by summer, though this closer alignment risks making the UK a "rule taker".
Across the Atlantic, macroeconomic data was positive, with Automatic Data Processing private payrolls hitting series highs and the March core Producer Price Index ("PPI") rising just 0.1% against a 0.5% consensus. Major US equity indices surged, with the Dow Jones Industrial Average climbing 3.2%. The S&P 500 rose 4.5% to its first record close since late January, and the Nasdaq Composite jumped 5.3%, tying its fifth-longest winning streak with 13 consecutive gains. Tech leadership resumed, driven by the 'Magnificent 7' companies, artificial intelligence (“AI”), and software. Treasury prices rose, as investors expect short-term interest rates to fall, with the market pricing in 14 basis points of rate cuts by year-end. The US Dollar Index fell, while Gold gained.
The Iran conflict dominated the week, but movement toward an end to the war provided a major tailwind for stocks. Despite President Donald Trump initially announcing a US blockade of the Strait of Hormuz, reports emerged of peace talks and a potential deal trading $20 billion in frozen Iranian funds for Iran's enriched uranium. Furthermore, Iran's Foreign Minister Abbas Araghchi confirmed that the Strait of Hormuz is completely open to commercial vessels during the ceasefire. This de-escalation sparked a sharp drop in energy markets, sending West Texas Intermediate ("WTI") crude down.
The UK housing market has experienced significant volatility, with average two-year fixed mortgage rates initially surging to 5.84% amid geopolitical turmoil. Fortunately, as swap rates ease following recent de-escalation, major lenders have started trimming these fixed rates.
Intertek Group, the British multinational assurance, inspection, product testing and certification company, surged an impressive 30.15% amid a broader outperformance in industrial support services. The stellar gain reflects the market’s renewed appreciation for the company's robust corporate flexibility and strong earnings momentum, particularly in a progressively stabilising macroeconomic environment. This confidence was crystallised when Intertek rejected a £7.9 billion takeover bid from Swedish private equity firm EQT, arguing the offer fundamentally undervalued its standalone growth prospects.
Entain, the prominent multinational sports betting and gaming group, gained 16.28% as a powerful dose of risk-on sentiment injected life back into consumer-facing sectors. This was a solid rebound from last week, which saw it as one of the worst performers in the FTSE 100. The turnaround highlights the firm's robust strategic positioning amid broader consumer resilience, which was significantly fuelled by a shift in forward-looking monetary expectations and a noticeable easing of broader geopolitical tensions across key operating markets. This overwhelmingly positive assessment from a wide array of institutional investors signals a deep-seated confidence in the leisure giant's proven track record of reliable, strong cash generation and its enhanced ability to successfully capitalise on stabilising macroeconomic and market fundamentals.
Imperial Brands, the British multinational tobacco and next-generation products company, fell 9.91% following a sharp rotation away from defensive stalwarts. The steep decline reflects growing investor apprehension towards traditional safe havens, particularly within the consumer staples sector, as broader markets rallied heavily on recent ceasefire optimism. This significant downward momentum highlights the lingering vulnerability and shift in sentiment towards defensive stocks, even as broader London markets demonstrated relative resilience and a pronounced move into cyclical and risk-on assets. Furthermore, this sharp movement reflected institutional caution and a re-evaluation of the firm's near-term earnings and growth targets in a suddenly aggressive, risk-on environment.
Market Commentary prepared by Walker Crips Investment Management Limited.
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No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
The value of investments can fall as well as rise. Investors may get back less than invested. Past performance is not a reliable indicator of future results.
The value of investments can fall as well as rise. Investors may get back less than invested.
