News of the week summary - 26/04/2026

The ceasefire holds, but the economic standoff continues

On Tuesday, with the two-week ceasefire between the United States and Iran hours from expiring and no peace deal in place, the truce was extended until Iran's leadership submitted a unified proposal. Oil jumped more than three percent on the day, with Brent crude rising above $100 per barrel, as the market processed what the extension actually meant: the fighting was paused, but the Strait of Hormuz remained closed to normal commercial shipping. Within hours of the announcement, Iran's Revolutionary Guard seized two container ships attempting to cross the strait, asserting they had done so without authorisation. The US naval blockade of Iranian ports remained in effect throughout the week.

The extension illustrated the particular difficulty of the situation. A ceasefire that prevents further military strikes does not, by itself, restore the flow of oil and gas that the world economy needs. Tanker traffic through the strait remained at a small fraction of its pre-war levels. The roughly 20 million barrels per day of supply that normally transits the passage was still largely blocked, forcing buyers to pay elevated prices for cargoes rerouted around southern Africa, wait for alternatives that did not exist in sufficient volume, or draw on strategic reserves that cannot be replenished until the straits reopen. Goldman Sachs analysts told CNBC that even without further escalation, every additional week that the blockade continued was drawing down global inventories in a way that could not continue indefinitely. Brent crude ended the week above $100, having recovered most of its post-ceasefire dip from two weeks earlier.

The gap between what financial markets were pricing and what physical energy markets were experiencing widened further this week. The S&P 500 extended its recovery to levels above where it traded before the conflict began, even as oil prices remained roughly 50 percent above their pre-war levels and households across every major economy absorbed those higher costs daily. Investors appeared to be pricing for resolution; physical commodity markets were pricing for continuation.

Intel's earnings ignite the longest semiconductor rally on record

Intel reported first-quarter results on Thursday that demolished Wall Street's forecasts and sent semiconductor stocks to their eighteenth consecutive day of gains, a winning streak that no other reading of the Philadelphia Semiconductor Index has matched. Revenue came in at $13.6 billion against a $12.4 billion consensus, while adjusted earnings per share of $0.29 arrived against an estimate of just one cent. The data centre and AI segment grew 22 percent year-on-year to $5.1 billion. The stock jumped 24 percent on Friday, its best single session since 1987, with AMD, Qualcomm and ARM each rising more than ten percent in sympathy.

Intel's turnaround matters beyond the company itself. For the better part of the AI boom, Nvidia's graphics processing units had supplied the dominant compute resource, and the chip sector's investment thesis was concentrated in one company and one type of chip. Intel's results suggested that the AI buildout was broadening: central processing units were seeing renewed demand as inference workloads scaled, and Intel's foundry business, which manufactures chips for other companies, was also finding customers. Research firm Omdia upgraded its 2026 semiconductor revenue forecast during the week, pointing to surging demand for memory and advanced packaging alongside the more familiar GPU spending. The PHLX Semiconductor Index gained 10 percent in the week alone and was up 39 percent for April, on course for its best month in decades.

The semiconductor rally carried implications beyond the tech sector. Chips are a leading indicator for capital spending broadly, and a sustained demand signal from both hyperscalers and corporate buyers suggests the AI infrastructure build is still early. It also reinforced the earnings backdrop: with the S&P 500 on track for around 14 percent year-on-year profit growth in the first quarter, based on reports through April 24, valuations at 21 times forward earnings were at least partly supported by the fundamental picture rather than pure sentiment.

Consumer sentiment falls to its lowest in four years

On Friday, the University of Michigan published its final April reading of consumer sentiment, which fell to 49.8, down from 52.2 in March and approaching the all-time low of 50 recorded in June 2022. Year-ahead inflation expectations jumped from 3.8 percent in March to 4.7 percent in April, the highest since late 2025. Longer-run expectations, covering the next five to ten years, climbed to 3.7 percent from 3.5 percent, a level that the Federal Reserve, which formally targets 2 percent inflation, would view with concern.

The gap between what consumers said and what the labour market data showed remained as wide as it was last month. Unemployment at 4.3 percent, a solid employment base, and improving corporate earnings pointed to an economy still growing at a reasonable pace. But the price of a gallon of petrol, which the American Automobile Association reported at $4.54 nationally, was 44 percent higher than a year earlier and visible at every filling station several times a week. Research consistently shows that energy prices carry outsized weight in consumer perceptions of inflation, and that households adjust their sentiment faster in response to petrol prices than they do to wage gains or employment data.

For the Federal Reserve, the shift in longer-run inflation expectations is the more concerning signal. A jump in the one-year number is expected when fuel prices surge; it should fade once prices stabilise. But if five-year expectations also rise, it suggests households and businesses are beginning to factor higher inflation into wage negotiations and pricing decisions. That is the transmission mechanism the Fed cannot afford to ignore, because once price expectations become entrenched, bringing them down requires more restrictive monetary policy than the initial shock itself warranted.

US retail sales in March show both strength and distortion

Earlier in the week, the Census Bureau reported that US retail sales rose 1.7 percent in March from February, the fastest monthly increase since March 2025. The headline number drew attention, but the composition told a more nuanced story. Petrol station sales jumped nearly 16 percent as fuel prices surged following the outbreak of conflict, accounting for the single largest driver of the month's gain. Stripping out both automobiles and petrol, the rest of the economy still registered a solid 0.65 percent monthly increase, the fastest pace in nine months.

What the retail sales data confirmed, alongside the falling savings rate and the widening gap between household sentiment and labour market strength, is that American consumers were absorbing the energy shock primarily by spending less on saving rather than by cutting consumption. For now, that meant economic activity remained resilient. The question the data left unanswered was how long that could continue. A personal saving rate that has already fallen to its lowest since 2022 leaves relatively little buffer if energy prices stay elevated for months rather than weeks, and the ceasefire extension this week did nothing to change the timeline for a return to normal Hormuz traffic.