A market in recovery, an outlook reshaped.

Welcome to the first edition of the ICON Market Update, published quarterly unless market conditions require an interim release.

We entered 2026 following an exceptional rally across most markets and asset classes in 2025. That momentum carried into January and February, delivering strong returns. However, the war in Iran has materially altered the outlook.

Initially, we were cautiously optimistic for the year, supported by monetary stimulus in the form of lower interest rates across many regions. Fiscal stimulus plans in several G7 countries — via tax reductions, increased government spending, or both — were also expected to underpin economic growth and asset prices.

The war in Iran, particularly the surge in oil prices, has changed this picture. Interest rate cuts are now off the table, with markets instead pricing in higher rates to counter inflation expectations. The timeline for reopening the Strait of Hormuz and restoring oil flows will determine whether this is a short-term supply shock or a more persistent disruption with recessionary potential.

After a sharp sell-off in March, global markets recovered most of the losses during April. The rebound was led by the US technology sector, where companies reported very strong results. The US market is now trading at an all-time high, which introduces its own risks.

Locally, the market lagged global peers in April's recovery, leaving valuations comparatively attractive. Some of the positive drivers from 2025 remain in play, such as a strong current account balance supported by high export commodity prices (gold and platinum) and previously low oil import costs. However, these benefits are now less pronounced than before the conflict in Iran. In addition, the lower inflation target of 3% that supported markets in 2025 may now lead to interest rate increases in 2026, which would be negative for equity markets. With a local government election only six months away, foreign investors may hesitate to chase these favourable valuations at this time.

Overall, the environment requires caution. Yet investors cannot remain entirely on the sidelines: shocks and uncertainty are inherent to markets, and long-term investors are compensated for enduring volatility. This underscores the importance of a disciplined financial advice process — to protect short-term capital while ensuring long-term capital is exposed to growth opportunities.

One-year return numbers are still looking very strong on the back of an exceptional 2025, while 2026 numbers are impacted by the war. Detailed market returns to 30 April 2026 are set out below.