With the arrival of spring, investors were given a breath of fresh air. Global markets began April under the shadow of new geopolitical challenges. New tariffs introduced by the U.S. administration that took aim at key EU export products, together with a shift in the nature of the conflict in the Middle East, led to a wave of cautious optimism that rewarded investors who remained invested and did not give in to panic during the downturn in March. After the initial effective military actions by the U.S. and Israel against Iran, the three countries returned to the negotiating table which gave markets hope that the Strait of Hormuz — a key route for the global transport of oil and liquefied gas — would once again remain open to shipping.
Although Europe is relatively less dependent on fuel transport from the Middle East, the economies of Asia and Japan are far more vulnerable, especially the island nation, which imports more than 90% of its oil based products from that region. Despite this, the benchmark Nikkei 225 recorded strong growth, leading developed markets, as local equities were supported by the weak yen, which closed the month at 156.58 per U.S. dollar compared with 143.07 a year earlier. Despite the cheap currency and strong export data for March, expectations of the Bank of Japan remain a restraining factor for growth because of the projected negative impact on automobile exports. Rising inflation in April (with wholesale prices increasing by 4.9% year-on-year) also created discomfort for investors, since the likelihood of a possible intervention by the central bank on addressing inflation increased. On the one hand, this would affect demand for Japanese goods outside the domestic market, and on the other, it would impact the carry trade transactions in place, where the Japanese yen is often the funding currency. An increase in interest rates combined with a strengthening of the yen is traditionally a strong incentive for investors to exit such trades, and this will be a factor taken by in the Federal Reserve’s next moves.
Despite the turbulence, the global economy continues to show resilience as the leading indices kept climbing despite occasional periods of nervousness. The movement underneath continues to drive the economic clock forward with solid confidence, and the first wave of 2026 earnings reports shows that businesses are managing to navigate the complex geopolitical environment. Based on the data released so far, 66% of the companies in the S&P 500 are outperforming the broader index, while in the Euro Stoxx 600, by the end of April, 60% had reported results exceeding market expectations.
This led to upward revisions in forecasts for the major indices, and while the technology sector remains a key driver, it is no longer the only engine in the world’s two largest economies. This was not, however, the start expected of the “factory of the world.” After a confident first quarter, China posted a disappointing result in industrial production, with growth of only 4.1% for the month, nearly 1.2% below the forecast, while the manufacturing PMI remained at 50.3. Consumers were shy to contribute, as consumption barely moved, rising by a modest 0.2%. Exports showed a rebound, reaching 2.5 trillion yuan, or an increase of 9.8%. Of course, these are not the only indicators shaping expectations for the global economy, but the OECD maintains its positive growth forecasts of 2.9% for 2026 and 3.0% for 2027, while the main factor keeping growth expectations at these levels remains geopolitical turbulence.
In the EU, the data remained mixed, with inflation and property prices rising for a second consecutive month. The effect of higher fuel prices quickly infiltrated the consumer price index, which reached 3.0% year-on-year — up from 2.6% in March and 1.9% in February. For now, the European Central Bank is keeping interest rates at 2.0%, but at its latest committee meeting in April, the topic of a potential rate hike was on the agenda, and June 2026 will be decisive for the central bank’s policy, since more data will become available. If there is no exit strategy regarding Iran, the ECB may resort to tightening.
Given the mixed conclusions from the month’s data, European markets reacted more moderately, and although they did post gains, these were much more subdued compared with the U.S. and Japan. The main drivers of the European economy were the technology sector, basic materials, and household products, with the first two pulling the index into positive territory. Among the weakest-performing sectors were retail, healthcare, and real estate, while consumer confidence recorded a sharp decline, falling to -19.4 for EU countries and even lower, to -20.6, for the eurozone— significantly below the long-term averages.
Low consumer confidence was not the only bad news for the European economy, as indicators of economic expectations also declined to a new, lower level, significantly below the average. However, the data for the backbone of the European economy — the industry — remained not only positive but also improved, as the eurozone PMI (Purchasing Managers’ Index) rose for a second time to 52.2 (below 50 is considered negative, above 50 positive). Output levels reached their highest point since August 2025, but this growth appears unsustainable, as it is based on an accelerated stockpiling campaign of intermediate goods and resources due to concerns about rising inflation and a possible supply-side shock.
Although the focus has shifted toward the defense industry under the ReArm Europe initiative, military expenditure remains subject to careful rationing, since more aggressive spending could lead to inflation in weapons systems and ammunition prices — an effect that is clearly undesirable for the member states involved. The high oil and natural gas prices are also exerting pressure on the heavy industry, and although Europe has managed to redirect its imports toward the U.S., Algeria, and Norway, a smaller but still significant share of supplies continues to come from Saudi Arabia and the United Arab Emirates.
There were some winners, however, including in one of the most affected sectors — cyclicals. Owing to the situation in the Middle East, sales of electric vehicles rose by 26.2% in the first quarter compared with the same period in 2025, with 1 in every 5 newly registered cars being electric, nearly matching those powered by petrol. The main reason cited by respondents was the desire for greater independence from the constant fluctuations in the more traditional fuels prices.
Inflation in the United States also quickly absorbed the new oil levels. After pressure from the high interest rates had gradually succeeded in putting it under control, the downward trend reversed due to disruptions in supply through the Strait of Hormuz, as well as continuing attacks on oil infrastructure in countries across the region. At the same time, the UAE announced its decision to leave OPEC as of May 1, 2026, thereby introducing an independent player into oil supply outside the organization’s control mechanisms, of which it had recently been a member. Venezuela, meanwhile, increased its oil production, but the persistently high prices of the ‘black gold’ pushed up U.S. inflation back to 3.8%, while the increase reported for the month of April alone reached 0.6%.
This rise, however, came against the advance of a surprisingly strong labor market, which added nearly 115,000 new jobs — more than double analysts’ expectations. Among the sectors reporting the strongest growth in new hiring were healthcare and transportation, while perhaps less surprisingly, layoffs in the technology sector continued as the focus on AI triggered a new wave of restructuring. Rising inflation was accompanied by an increase in wages, although over the last 12 months wage growth lagged the consumer price index by 0.2%.
April was also the first real test in 2026 for companies in the S&P 500 whose earnings reports had been eagerly awaited — one year after the new President took office. Once again, the results surprised on the upside, as the index closed with a monthly gain of 10.4%, marking the second-best April since 1950. AMD, Intel, and memory producer Sandisk led the performance rankings thanks to sustained demand for new AI capacity, but this was not enough for the technology sector to occupy the first place. Communications was the best-performing sector, with a gain of 18.4%, while cyclical goods and services ranked third with a growth of 11.7%.
Military operations in more than 130 locations around the world pushed investor interest, but the shares of some defense companies, such as Lockheed Martin and Northrop Grumman, ended up near the bottom of the table, undergoing a correction, after earlier in April both had appeared ready to return to growth. Optimism among investors remained measured despite the good news, as concerns once again centered on the pace of AI investment and the uncertain outcome of the conflict in Iran.
A significant risk is also posed by the rise in bond yields, as 10-year U.S. Treasuries closed the month at 4.39%, while 2-year notes ended at 3.89%. After the market had expected the normalization of interest-rate policy to continue, and the nomination of Kevin Warsh had further supported forecasts for lower rates, the rebound in core and headline inflation, together with persistently high fuel prices, changed the direction of the wind, and the market quickly recalibrated its models, anticipating a shift in the Federal Reserve’s stance.
Fixed-income securities diminishing role as a hedge against inflation and concerns that the Fed may even be forced to raise rates added further pressure to bond prices, which were already falling. The weakening of the dollar was another hurdle for the debt securities, as the dollar declined by 0.9% against the euro. In the UK, yields on 10-year gilts even exceeded 5%, closing the month at 5.023%. Political shake off played the role of an additional catalyst, as Prime Minister Starmer faced internal party opposition and his grip on the party leadership appeared increasingly uncertain.
Germany may have been among the less severely affected countries, but 10-year German Bunds also followed the global trend of rising yields, closing the month at 3.01%, once again due to concerns over higher inflation levels.
The Bulgarian Stock Exchange reported a cooling in investor activity, as the exchange’s turnover for the month declined compared with March, although since the beginning of the year turnover has still remained close to double — 98%. Shelly Group, Sopharma, and Doverie United Holding ranked among the top companies by number of trades, with the total number of transactions across all companies on the exchange reaching 5 743.
The benchmark SOFIX index started strong, but by the middle of April it quickly gave up its gains, closing the month up just 0.6%, while BGREIT, which tracks the shares of ADSIC (companies focused on real estate), posted a negative return of -1.1%. Similar to the global markets, April also brought an increase in the consumer price index of 1.8%, bringing annual inflation to 6.8%.

¹ Investing.com
² Bank of Japan Outlook for Economic Activity and Prices (April 2026)
³ Eurostat 
⁴ European Commission Latest business and consumer surveys - Economy and Finance
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