Federated Hermes: Weekly Markets Wrap Up 23 April

23 april 2026

Inflatie Geopolitiek

In this week’s markets wrap‑up, our investment teams discuss how geopolitical developments reshaped inflation expectations, drove sharp moves in rates, and ultimately supported a rebound in equity risk sentiment.

Mitch Reznick, Head of Fixed Income – London at Federated Hermes

All Eyes on the Strait not Stats

On Friday, February 27^th, the liquid 10‑year gilt reached its low for the year at 4.23%. When markets next opened on Monday, March 2^nd, that same security closed 14 basis points wider, a move of more than 3%. That alone would qualify as dramatic, but the gilt kept going.

The conflict in the Middle East has flipped UK inflation expectations from disinflation to reflation, predicated on the sharp rise in fossil fuel prices. From that February 27th trough to its peak just two weeks later at 4.99%, the gilt moved more than 75 basis points, roughly 18%.

It was against this backdrop that markets focused on the March UK CPI release. After six weeks of rates volatility, the print disappointed those positioned for further fireworks, landing exactly in line with expectations at 3.3%.

Yes, “petrol-led” inflation has come in higher following the disinflationary trend in place since last summer. That rise in UK CPI versus February means less to the market than the forward‑looking headlines scrolling across trading screens. For now, those headlines indicate that, as fragile as it may be, the ceasefire has been extended indefinitely.

Charlotte Daughtrey, Investment Director for Equities at Federated Hermes

Equities Advance Amid Easing Uncertainty

Global equities advanced this week as markets were driven by a reassessment of geopolitical risk, easing inflation concerns and broadly resilient economic data. Risk appetite improved as investors priced a lower probability of sustained disruption to energy supply, contributing to softer oil prices and a moderation in near term inflation fears. This shift allowed markets to refocus on fundamentals rather than tail risks.

Inflation data provided modest reassurance that disinflationary trends remain intact. UK inflation printed broadly in line with expectations, while US producer price data suggested higher energy costs have not yet translated into broader pricing pressures.

Equity gains were broad based across regions and market caps. Developed markets outperformed over the week, supported by strength in US equities, while Emerging Markets continued to lead on a month to date basis.

Small cap stocks outperformed both over the week and month to date, reflecting improving confidence in the domestic growth outlook as recession concerns receded. Overall, market performance reflected easing uncertainty rather than a material change in the underlying growth backdrop.