Weekly Market Update: 10th Apr
10/04/2026
Lucy Smith discusses the relief rally following the ceasefire agreement in the Middle East, Bill Ackman’s offer for Universal Music Group, and the increasing US oil production.
Lucy Smith
Senior Investment Manager
Transcript
Good morning and welcome to the Killik & Co market update.
It has been an eventful week in the markets, driven largely by developments in the Middle East. We initially saw a strong positive reaction following the announcement of a ceasefire between the US, Israel, and Iran, alongside the reopening of the Strait of Hormuz.
However, that optimism proved to be short-lived. Israel subsequently launched strikes on Lebanon, which Iran claims broke the ceasefire agreement. As a result, access to the Strait has once again been restricted.
We saw a strong relief rally following the initial ceasefire news, with global markets surging. Over the course of the day, the MSCI World Index rose by around 3%, while the S&P 500 gained 2.5%, the NASDAQ increased by 2.9%, and the MSCI UK climbed by 2.4%. Looking at the performance year-to-date of the MSCI world index, you can see that markets had previously declined by over 5% during March. However, this week’s rally has pushed returns back into positive territory, highlighting how quickly sentiment can shift.
This chart shows the VIX index, also known as the fear index, over the past year. The index which measures the expected level of volatility in equity markets has fallen significantly over the past week and is now at its lowest level in over a month. This is because the ceasefire deal would have provided some clarity to investors and meaning that they could expect slightly calmer markets in the short term. However, it still remains above the critical 20 level which does indicate that investors are still expecting further volatility in the market.
In energy markets, Brent crude oil experienced a sharp sell-off following the ceasefire news. This chart shows the price of Brent Crude oil year to date. You can see that prices fell by as much as 15% in a single day, having previously been trading at around $110 per barrel. Oil has since recovered slightly and is now trading just below $100 per barrel, still roughly one-third higher than pre-conflict levels.
The decline in oil prices initially weighed on major energy companies, as you can see with this chart showing the year-to-date share price of BP and Shell, who both experienced falls of around 5%. However, as concerns emerged over the stability of the ceasefire and reports indicated renewed disruption in the Strait of the oil companies have rallied. So far this year, BP is up around 32% and Shell around 25%.
This week Bill Ackman has made an offer to acquire Universal Music Group, also known as UMG, the world’s largest music label, which controls roughly one-third of the global market. The company represents many of the world’s leading artists, including Taylor Swift, Justin Bieber, and Kendrick Lamar. Pershing Square currently holds a 4.6% stake in UMG, making it the fourth-largest shareholder.
Looking at the share price over the last 5 years, you can see in the pink box that the shares in jumped significantly in reaction to the news, up around 13% reflecting positive investor sentiment. UMG was spun out of Vivendi in 2021, and the share price has not performed too well since, which is something Ackman believes he can improve. It is widely viewed as a positive for the company whether the offer goes through or not. The transaction would merge the record label with Pershing Square SPARC Holdings, and it would shift UMG’s primary stock listing from Amsterdam to the New York Stock Exchange.
Ackman has previously argued that UMG would benefit from a US listing, citing a valuation gap between US and European markets.
The price-to-earnings, or P/E, ratio measures a company’s share price relative to its earnings. It essentially indicates how much investors are willing to pay for each dollar of profit.
Currently, the S&P 500 trades on a multiple of around 27.3 times earnings, compared to approximately 17.8 times for the STOXX Europe 50. This suggests that investors are generally willing to pay a premium for US-listed companies, often reflecting stronger growth expectations.
Looking at the broader industry, global music revenues have evolved significantly over time. Since 2010, there has been exponential growth in streaming, which now accounts for approximately $22 billion in annual revenue as of 2025. Since UMG generates the highest revenues globally from music streaming and is therefore well positioned to benefit from this trend.
The US rates of oil exportation has been increasing significantly throughout 2026, and looks as though that may continue. Oil research group, Kpler, estimate that there are currently 68 empty tankers on their way to the US, in comparison with just 24 the week before the war began.
This chart shows the total volume of crude oil and other materials that go into a refinery for processing over a given period. The larger grey bar highlights the 2021-2025 range, whereas the orange bar shows the 2025 inputs. You can see on the dark orange line that the figures so far this year are above the previous averages, suggesting that the US is moving to produce more oil in comparison to previous averages. This is likely being driven in part by demand from Asian refiners seeking alternative supply amid ongoing market disruptions.
We have shown this chart before, but it shows the world crude oil reserves vs production across 2025. You can see that the US is already a key player, producing 17% of global crude oil production, and that Venezuela has a large reserve but a low production. This week, an oil tanker arrived in the US from Venezuela carrying 400,000 barrels of Venezuela crude oil.
Earlier in the week, the US President stated that the country imports very little oil via the Strait of Hormuz and does not rely heavily on Middle Eastern supply.
As a result, increased imports from countries such as Venezuela could help support both domestic consumption and export capacity going forward.
Looking forward to the week ahead we have a busy week next week with earnings season kicking off, with Goldman Sachs and LVHM reporting on Monday, JP Morgan and Sika on Tuesday, Bank of America and ASML on Wednesday, and Tesco, Abbott Laboratories, Netflix and TSMC on Thursday.
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