Market Insights April 27, 2026

Equity markets consolidate after three weeks of strong rebound

After three weeks of sustained gains, equity markets entered a consolidation phase over the past week, particularly across European exchanges. This movement contrasts with the resilience observed on Wall Street and in major Asian markets, which continued their upward momentum. The divergence is largely explained by the robust performance of technology stocks, whose quarterly earnings releases have generally exceeded analysts’ expectations.

Nevertheless, the geopolitical environment remains a major source of uncertainty. Diplomatic negotiations in the Middle East are struggling to make progress, while the Strait of Hormuz remains closed to maritime traffic, fuelling tensions in energy markets.

Against this backdrop, despite solid corporate fundamentals, short-term caution remains warranted, as investors continue to monitor any developments that could influence the trajectory of financial markets.

The Schrödinger Strait

For several weeks, the oil market has been evolving in what can only be described as a paradoxical situation. The Strait of Hormuz, a key transit point for global oil trade, appears at once both closed and open, with its status varying depending on the speaker and the audience being addressed, much like Schrödinger's cat, which is both alive and dead according to quantum physics. A full reopening is regularly mentioned, yet no concrete progress has materialised. The conflict appears neither close to resolution nor on the verge of significant escalation. This persistent uncertainty partly explains the recent rise in oil prices.

From a fundamental perspective, reading the market remains complex. Oil flows transiting through the Strait of Hormuz have declined significantly, yet the observed drawdown in inventories has been far more limited. This gap can be explained by several adjustments. Exports have found alternative routes, notably through an expected increase in US shipments. Certain countries, particularly China, have also drawn on inventories for which transparency remains limited. Finally, demand itself has adapted to this new environment. As a result, despite ongoing tensions, the market balance has so far been preserved, and fears of immediate shortages have receded.

This situation nevertheless remains fragile. Each additional week of status quo places further pressure on inventory levels. Conversely, any announcement of peace would quickly alter investor sentiment by paving the way for a gradual normalisation of the market. At this stage, we believe that a resolution will eventually emerge, which should reduce the risk premium embedded in prices. However, crude oil is likely to remain structurally more expensive than before the crisis, notably due to the need to rebuild inventories in the months ahead.

In this uncertain environment, economic players are seeking to reduce their exposure to geopolitical shocks. This dynamic is benefiting renewable energy, for which structural demand continues to grow despite certain political resistance, particularly in the United States. Nuclear energy could also emerge stronger from this period. Although it still represents only a modest share of the global energy mix, it offers stable and low-carbon power generation. Ongoing technological advances could moreover reduce construction costs and lead times, improving its attractiveness over the medium and long term. 

This week’s figure: 18

The PHLX Semiconductor Sector Index (SOX), which brings together the largest technology companies active in the semiconductor sector, closed the week at a record high after eighteen consecutive sessions of gains, reflecting renewed enthusiasm for the Artificial Intelligence theme.