Record-setting momentum rally is drawing doubters

Published Mon, Apr 27, 2026 · 06:22 AM

[NEW YORK/SINGAPORE] April’s rally in risk assets has weathered stalled peace talks, signs of resurgent inflation and a central-bank succession drama. Investors may be about to find out if the speed of the advance itself poses a threat to a further ascent.

Global equities enter the week at or near records, with the S&P 500 up almost 10 per cent since the end of March, putting it on pace for the best monthly advance since late 2020. Treasury yields fell on Friday (Apr 24) as the closing of a Justice Department probe of Fed chief Jerome Powell cleared a path to Kevin Warsh’s confirmation, boosting bets that the central bank could resume cutting interest rates before the year is out.

Bumper earnings and a resilient economy have pushed the S&P 500 about 3 per cent over the high it set before the Iran war began. On Friday, stocks were lifted by hopes that the US and Iran would make headway in peace negotiations over the weekend.

But the risks from the conflict have not receded. Those talks were called off, oil prices remain high, and still-elevated Treasury yields are pushing up borrowing costs across markets as traders brace for more inflation shocks.

“I am personally cautious that the market is driving at 120 kmh now, and may have less reaction time when it is really time to change lanes,” said Francis Tan, Asia chief strategist at Indosuez Wealth in Singapore.

Trading in stocks, bonds and oil futures resumes in earnest at 6 pm New York time on Sunday.

There are some signs that investor enthusiasm for the biggest beneficiaries of the month-long rally may be waning. USO, the biggest US exchange-traded fund tracking crude, is on pace for its steepest monthly outflow since 2009. SOXX, one of the largest semiconductor funds, saw one of its largest weekly withdrawals ever – a week after reeling in record cash. Both are among the market’s most crowded trades.

“We are seeing increased protection buying at the highs,” John Tully, who leads global macro sales at BofA Securities, wrote in a note to clients on Sunday. According to BofA’s trading desk, investors should hedge across rate sensitive areas of the market, such as small caps, regional banks and gold, adding that underperformance might still shake out those holding gold as high beta risk asset.

Investors will get a key glimpse into the state of the American earnings machine this week. Alphabet, Microsoft, Amazon.com and Meta Platforms are set to report on Wednesday, followed by Apple a day later. The companies represent a quarter of the S&P 500’s market capitalisation.

“The violent rally in risk from the March lows has left investors cautious into Mega Tech EPS, wondering if the good news is already in the price,” Michael Romano, head of hedge fund equity derivative sales at UBS Securities, wrote in a note to clients Sunday. “Big Tech EPS this week has the potential to fuel a catch-up trade across the hyperscalers but the bar is high and positioning is crowded.”

An attempt to resume peace talks over the Iran war stalled over the weekend after US President Donald Trump cancelled a planned trip by his top envoys and the Islamic Republic said that it will not negotiate so long as it’s being threatened.

Trump on Saturday told Jared Kushner and Steve Witkoff to skip the trip to Pakistan, which is mediating talks, and later told reporters that Iran “offered a lot, but not enough”. Iranian President Masoud Pezeshkian said that his nation will not enter “imposed negotiations under threats or blockade.”

While a ceasefire has mostly held since early April, both countries are maintaining a blockade on the Strait of Hormuz, making the key energy chokepoint virtually impassable.

Hopes truce negotiations would proceed sent oil prices lower on Friday, with West Texas Intermediate futures falling 1.5 per cent to settle above US$94 a barrel. The declined pared a weekly gain that – at 13 per cent – remained the biggest jump since the initial surge triggered by the war in early March. BLOOMBERG