6 April 2026 – 12 April 2026

The Week in Global Markets

Global markets entered their most constructive phase since the outbreak of the conflict, as a long-awaited diplomatic breakthrough finally emerged after weeks dominated by military escalation, oil supply fears, and persistent inflation anxiety. Just 90 minutes before the previously anticipated deadline for further escalation, the United States and Iran reached a two-week ceasefire, brokered by Pakistan, immediately changing the tone across global markets. For the first time in weeks, investors were no longer focused on whether the next headline would involve further strikes on energy infrastructure or a broader regional escalation. Instead, the market began to shift toward a new question: whether diplomacy could now begin to unwind the economic damage already created by the conflict.

That change in psychology was quickly reflected across asset classes. Oil moved sharply lower on the ceasefire announcement, while equities and digital assets extended their rebound as investors began to front-run the possibility that the conflict was entering a more formal negotiation phase. Yet even as the market welcomed the diplomatic breakthrough, the week also served as a reminder that the consequences of war do not disappear the moment a ceasefire is announced. What emerged over the course of the week was a more complex narrative — one in which political relief and economic aftershock existed side by side.

Geopolitical Developments

The most important development of the week was the ceasefire itself, which marked the first structured diplomatic framework since the conflict began. Brokered by Pakistan Prime Minister Shehbaz Sharif and supported by military coordination under Field Marshal Asim Munir, the agreement established a two-week suspension of active hostilities between the US, Israel, and Iran, while formal talks were scheduled to begin in Islamabad on 10 April. As part of the arrangement, Iran agreed to the immediate, complete, and safe reopening of the Strait of Hormuz during the ceasefire period, an outcome that would have seemed unlikely only days earlier.

The importance of Pakistan’s role cannot be understated. Up until now, the conflict had largely been shaped by military exchanges, indirect messaging, and conflicting public statements from multiple sides. This week changed that dynamic by introducing a clear diplomatic venue, a timeline for talks, and the first real framework around which markets could begin to build expectations. Iran’s 10-point peace proposal, which reportedly includes demands such as sanctions relief, infrastructure rebuilding, and a permanent end to hostilities, remains far from final agreement, but the fact that both sides were willing to engage around a structured proposal was enough to materially improve market confidence.

At the same time, the geopolitical picture remained far from fully resolved. Israeli Prime Minister Netanyahu made clear that the ceasefire did not extend to Lebanon, meaning that the conflict involving Hezbollah remains outside the current arrangement. That detail matters because it reminds markets that while the ceasefire is significant, it is not yet synonymous with a full regional de-escalation. The market spent much of the week welcoming the breakthrough, but it also kept one eye on whether unresolved fronts could eventually threaten the credibility of the agreement.

Energy & Supply Chain Recovery

If the ceasefire changed market sentiment, the energy market provided the clearest test of whether diplomacy was translating into real-world normalization. The initial response was powerful: oil fell sharply after the ceasefire announcement as investors moved to unwind some of the supply shock premium that had accumulated in previous weeks. With Hormuz temporarily reopened and both sides moving into formal talks, the market began to price the possibility that the worst-case energy disruption scenario might finally be avoided.

However, the week quickly made clear that reopening a trade route is not the same as restoring a supply system. Despite the ceasefire and the formal agreement around Hormuz, actual shipping activity remained well below 10% of normal volumes, according to Reuters. That detail became one of the most important realities of the week. While the market was willing to celebrate the diplomatic headline, physical trade flow data showed that normalization would take time. Vessels continued to face routing restrictions, insurers remained cautious, and commercial confidence had clearly not yet returned in full.

This more cautious interpretation was reinforced by the physical damage already sustained across the Gulf. Saudi Arabia disclosed that bombardments had reduced oil output capacity by 600,000 barrels per day, while throughput on its East-West Pipeline had been cut by another 700,000 barrels per day. In practical terms, this means that even if diplomacy continues to hold, the region cannot instantly return to pre-war supply conditions. The market increasingly began to distinguish between headline peace and actual restoration of productive capacity, and that distinction became one of the central global macro stories of the week.

Macro & Inflation Signals

The week’s major macro event was the release of the March CPI report, which showed that the economic consequences of the conflict had already begun feeding through into inflation data. Headline CPI surged 0.9% month-over-month, the largest monthly increase since 2022, pushing the annual inflation rate to 3.3%, up from February’s 2.6%. The primary driver was energy, with the energy index rising 10.9% in a single month, its largest monthly increase since September 2005. In effect, the report confirmed what markets had already suspected: the geopolitical supply shock had now become visible in hard economic data.

Yet the report was not uniformly negative for sentiment. The market found some relief in core CPI, which rose only 0.2%, below expectations. That detail mattered because it suggested the inflation surge remained concentrated in energy rather than broadening aggressively into underlying price pressures. For investors, this helped preserve the view that the inflation spike may be sharp but not necessarily structural, especially if diplomacy continues to hold and oil remains below the psychologically important USD 100 level.

Other macro signals added to the sense that the broader setup for the second half of 2026 could improve if geopolitical normalization continues. The delayed hearing around Kevin Warsh’s potential Fed chair nomination also remained in the background, with markets aware that any eventual dovish shift in Federal Reserve leadership could become an additional catalyst for risk assets later in the year. For now, though, the CPI report served as the clearest reminder that even as political risk begins to ease, macro repair will move more slowly.

Market Narrative & What Changed This Week

The defining narrative of the week was relief meeting realism. Markets finally received the diplomatic breakthrough they had been hoping for, and the response across asset classes made clear how under-positioned investors had been for a genuine pause in hostilities. But at the same time, the week forced markets to confront a deeper truth: the economic and physical damage caused by the conflict will not disappear simply because negotiations have begun.

That is what truly changed this week. The market is no longer pricing only the risk of war escalation. It is now beginning to price the difficulty of post-conflict normalization. The key questions have shifted. Investors are now asking whether Hormuz traffic can genuinely recover, whether Gulf infrastructure can be repaired fast enough to stabilize supply, whether the Islamabad talks can produce a framework durable enough to survive beyond the ceasefire window, and whether inflation can begin to cool once the energy shock fades.

This marks the beginning of a new phase for global markets. The immediate fear of escalation may have eased, but the market’s focus has now moved toward whether diplomacy can successfully transition into real economic normalization — and that will likely remain the defining story in the weeks ahead.