Blogs

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 14/04/2026.   

U.S.-Iran negotiations fail – what’s next?

As the weekend saw failed negotiations between the U.S. and Iran, we examine what this means for investors.

Key highlights

• The Strait of Hormuz remains contested: Despite a ceasefire agreement, commercial shipping hasn’t fully resumed as Iran demands transit fees and reparations for war damage.
• Markets remain resilient: Equity and credit markets stayed strong despite the ongoing conflict, suggesting many investors reduced risk early in the crisis.
• UK bonds stand out: UK bonds offer the highest yields in the G7 and stand to benefit directly from any easing of Middle East hostilities.

The Iran war: A fragile ceasefire

Credit spreads narrowed close to their historic tightest despite the Middle East conflict

Source: Bloomberg

Last week, markets gained for a second consecutive week, and credit spreads narrowed despite the single most important driver of market sentiment – the evolving situation in the U.S.-Iran war.

When European investors departed for the Easter weekend, President Trump’s deadline for the reopening of the Strait of Hormuz was hanging over markets. The president had promised to unleash a wave of strikes against power and desalination plants if the Strait wasn’t reopened by Easter Monday. That deadline was extended to 8pm local time last Tuesday (1am on Wednesday in the UK).

Shortly before that deadline, it was announced that a ceasefire agreement had been reached, which became the week’s defining moment. The ceasefire, agreed between the U.S. and Iran, is conditioned principally on the reopening of the Strait of Hormuz to commercial shipping. Iran confirmed the Strait would be ‘navigable’, but the details remain deeply contested.

The Iranian idea of an open Strait seemed to require transit fees, which is something that multiple regional and global consumers of Gulf oil have refused to consider, complicating the path to a durable resolution.

By the time European markets opened, it was clear that this ceasefire was imperfect. There was confusion over the terms, suggestions that the parties had agreed to different drafts and disputes over whether the ceasefire extended to action in Lebanon. Several countries have refused to negotiate transit with Iran, and President Trump has made clear that transit fees are not part of the agreement. As a result, shipping didn’t meaningfully resume in the Strait ahead of scheduled talks between Iran and the U.S. in Islamabad, Pakistan over the weekend.

Disagreements extend beyond the issue of transit fees, with Iran also demanding reparations for war damage.

By the beginning of this week, the emphasis had changed, with President Trump instead choosing to impose a blockade on vessels bound for Iranian ports. U.S. officials announced this has prompted Iran to make contact again, and new talks are rumoured to be taking place this weekend.

What are the possible outcomes?

Helima Croft of RBC Capital Markets outlined three possible scenarios:

• The divide between Washington and Tehran’s negotiating positions proves too difficult to bridge and fighting resumes.
• A deal is reached that largely meets Iran’s established enrichment and missile priorities and comes with the added bonus of control of the Strait of Hormuz.
• A no-peace, no-hot-war pause of indeterminate duration emerges that renders the ultimate security of the region’s waterways unsettled.

The resilience of equity and credit markets would suggest that investors are not positioned for the first option. The extending deadlines, erratic social media posts, and lack of response to reports of ceasefire violations suggest that the U.S. is reluctant to escalate military action further, possibly due to the humanitarian or political consequences.

The central purpose of the initial action was to prevent Iran from achieving the capability to produce a nuclear weapon, but Iran now demands the right to enrich uranium without supervision. It seems inconceivable that the U.S. could agree to that, as it would mark a huge backward step from the Joint Comprehensive Plan of Action (JCPOA) agreement, which President Trump pulled America out of in 2018.

By Friday, there had been no meaningful commercial traffic transiting the Strait of Hormuz since the ceasefire was announced. Oil prices remained within touching distance of $100 per barrel, underscoring the continued tightness in energy markets.

Equity and credit markets remain strong

It may be surprising against this backdrop that equity and credit markets have remained resilient. For context, markets found stability prior to the ceasefire agreement, reflecting the fact that many investors reduced risk during the early weeks of the war.

Markets continue to enjoy inflows from relatively robust employment levels and companies are buying their shares back. Under such circumstances, the risks facing investors start to shift, with the potential for them to be under exposed to any good news – for example, Friday’s story that Ukraine’s top negotiator believes a potential peace deal with Russia is within reach.

European currencies and bonds all directly benefit from any easing of hostilities. UK bonds in particular offer the highest yields in the G7 because of the tendency to have higher interest rates. Policy is slightly restrictive already, so there’s a weaker case for interest rate increases.

Despite such high yields, the predominantly long-dated funding of the UK means that it has been protected to some extent from the sharp increases of bond yields in recent years. So, despite its bond yields being the highest in the G7, the rate it pays (the coupon on its bonds) is close to average.

Yields for investors and costs for issuers

Source: Bloomberg

As we’ve previously noted, the UK bond market and sterling closely reflect the economic reality of the UK economy, however the UK equity market is more international and very diversified across sectors. The relatively high weightings in defensives and energy mean that it will remain more defensive than other equity markets if conflict intensifies, and it will benefit less than other major European markets from an easing of hostilities.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

15/04/2026

Please see the below article from EPIC Investment Partners detailing their discussions on the disruption caused by the US-Iran war and supply chain pressures. Received this morning 14/04/2026.

The current disruption in the Strait of Hormuz is often framed as an energy shock. In reality, it is a far broader economic fracture, one that exposes a sharp divide between infrastructure-rich exporters and highly vulnerable importers, with consequences rippling from Asian factories to European skies and global food systems.

At the centre sit Saudi Arabia, the UAE and Qatar, no longer just commodity exporters, but increasingly “fortress economies.” Years of investment in bypass infrastructure, from Red Sea pipelines to Fujairah’s offshore hub, have insulated core revenue streams from chokepoint risk. As flows tighten, these producers are not paralysed; they are repricing scarcity. The result is counterintuitive: disruption reinforces their market power, allowing them to sell less volume at higher margins while much of the world scrambles for alternatives.

What makes the disruption particularly acute is the lack of viable substitutes. The Gulf holds a structural dominance over specific high-grade commodities and specialised infrastructure. Supply chains for liquefied natural gas and high-nitrogen fertilisers are built on multi-decade contracts and tightly calibrated technical specifications, making substitution both slow and capital intensive. The region accounts for roughly 33% of global urea production and around 20% of ammonia, much of which is tied to Hormuz-linked flows, meaning disruption feeds directly into global food pricing. Replacing Qatar’s ~30% share of global helium or sourcing equivalent grades of Saudi sulphur would require years of new investment that simply does not exist in a ready state. At the same time, the region’s scale, accounting for nearly one-fifth of global petroleum liquids, exceeds the spare capacity available elsewhere, creating a supply vacuum that cannot be quickly filled.

The burden therefore shifts to import-dependent economies. India stands out as one of the most exposed, reliant on the Strait for around 40% of its crude imports and heavily dependent on Gulf fertilisers. This creates a dual shock, rising energy costs alongside pressure on agricultural output and food inflation.

Japan and South Korea face a different but equally acute risk sourcing around 70–90% of their crude imports via the Strait, leaving them highly sensitive to prolonged disruption. Their exposure extends beyond energy into industrial inputs such as helium, critical for semiconductors and medical technology, turning logistical disruption into a broader manufacturing constraint.

Regionally, the asymmetry is just as stark. Bahrain, for example, lacking the bypass routes of its neighbours, remains physically and economically trapped within the Gulf. Its aluminium exports and broader trade flows are acutely sensitive to shipping constraints and insurance spikes. By contrast, Saudi and UAE retain strategic optionality, maintaining export routes even as conditions tighten.

Beyond energy, the wider spillovers are increasingly visible. Europe and Asia face rising costs and capacity constraints, while Gulf hubs leverage refining and rerouting advantages to capture upside. In aviation, Europe depends on the region for 25–30% of its jet fuel, while airlines across Asia are already reducing capacity as prices surge.

The net effect is a profound economic decoupling. Import-dependent economies absorb inflation, shortages and industrial strain, while Saudi Arabia, the UAE and Qatar emerge not just resilient but indispensable, positioned at the centre of energy, food and industrial supply chains the global economy cannot easily replace.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

14/04/2026

Please see the below article from Tatton Investment Management discussing market reactions to the Iran ceasefire alongside risks from energy prices, AI supply chains and US fiscal policy, received this morning – 13/04/2026.

Brief relief

Markets burst up on the ceasefire news but that optimism, yet again, has had to be tempered. The Strait of Hormuz now are not only closed but “blockaded, perhaps a risky attempt to create more pressure on China to press Iran for a deal. Meanwhile, even if Iran does make concessions, Israel’s leadership seems to prefer further action. Vice-President Vance said there had been a “legitimate misunderstanding” over whether or not the ceasefire included Lebanon, pointing to a split between the US and Israel.

There’s a disconnect between markets’ relief and the real-world scramble for resources. Spot dated crude oil prices for June are nearly 40% above current near-contract futures, reflecting an extreme supply crunch. Even if the ceasefire holds, the war has already raised fuel prices enough for US CPI to show a 0.9% rise in March and it will affect broader prices from April onwards.

Still, markets have been optimistic throughout, and have shown remarkably little downside as Monday starts. Stocks have not entered full bearish territory and there has been little impact on credit spreads. Looking at the US economy, that’s understandable. There’s no sign of labour market stress and no real sign of companies suffering from the war – exemplified by accelerating corporate earnings growth. That’s brought down equity valuations, given US stocks are roughly where they were last October. With the dollar now strengthening, US stocks look very attractive to international investors.

Higher bond yields make equity valuations a little less attractive – and yields haven’t come down as much as you might expect since the ceasefire. If US growth keeps going strong, yields (and interest rates) could remain high, especially given Trump’s desire to borrow more (see below). The push for defence spending could mean fiscal indiscipline around the world. The UK has tried to maintain discipline with its fiscal rules, but the government’s commitment to those rules will be tested by bruising local elections. There’s still potential for yields to fall, in line with other asset gains. It’s just not a given.

The bond reaction will impact how markets deal with their previous anxieties: AI and private credit. With any luck, we’ll be worrying about the old themes by May.

Pax Silica – NATO for AI

Despite Trump’s misgivings about NATO, his administration is spearheading a NATO-of-sorts for AI. Washington launched Pax Silica in December, grouping allies under an AI supply chain umbrella, securing everything from mining to chips and infrastructure. It took shape after China’s export controls on rare earth metals, but is arguably an overdue response to Beijing’s Belt and Road Initiative (BRI). Around 150 countries have signed BRI agreements with Beijing since 2013, helping China dominate the rare earth sector. Trump would never admit it, but Pax Silica also builds on Biden’s CHIPS Act, encouraging US chip manufacturing (like TSMC’s “gigafab” in Arizona).

Washington is playing catchup in securing supply chains against China. It’s not just rare earths; China beats the US in several AI areas, according to ASPI. Taiwan is (unofficially) part of Pax Silica due to chipmaking giant TSMC, but reliance on Taiwan isn’t a great way of China-proofing your supply chain. Indeed, Taiwan has a strong incentive to delay TSMC’s cutting-edge production in Arizona, or else risk losing its ‘silicon shield’. Then there’s the fact that no amount of alliance-building can change the fact that so much of the world’s minerals are in Chinese earth.

Perhaps Pax Silica is too little too late, but securing supply chains is always better than not doing so. It shows that important matters of state can carry on, despite Trump’s scorched earth approach to international relations. The most interesting Pax Silica member is India, which, despite its own gripes with China, has never been keen to throw its lot in with the west. One has to wonder how much Pax Silica benefits its non-US members. Supply chain security is good, but Trump’s second term has proven that reliance on the US can be a major vulnerability. That might limit how committed countries are to Pax Silica.

Trump’s budget throws caution to the wind

Axios summarised President Trump’s 2027 budget plans as “all guns, no butter”. The White House wants roughly $500bn in extra defence spending and a cut of around $73bn to non-defence discretional funding (a 10% cut). Clearly, $73bn doesn’t outweigh $500bn, and yet White House proposals imply falling debt-to-GDP by 2026. That’s thanks to the administration’s assumption of 3% annual growth over the next decade. That’s in line with Treasury Secretary Bessent’s “3-3-3” plan, but no one else thinks it’s realistic. The Congressional Budget Office and the Fed both predict US growth under 2%.

The president’s budget is a statement of priorities rather than a policy plan; it’s up to Congress to form and pass those. Frankly, the 3% growth assumption is a fantasy. The only periods of sustained high growth in US history have been associated with population growth – but Trump cracking down on immigration. The plans therefore show the president’s disregard for fiscal constraint.

The Republican party has often given Trump a free pass on the deficit, but that could run out. Presidents tend to lose party influence in their final years, and the cracks are already appearing over the Iran war. We expect more Republicans to challenge Trump over the deficit in the years ahead.

The budget’s fiscal laxity didn’t move US treasury yields at all (they fell, thanks to the Iran ceasefire) showing that markets don’t attach much importance to it. If the budget is substantially changed though, it will likely mean a disruptive budget battle later this year. Strangely, Trump’s proposal assumes treasury yields falling to 3.5% next year – a strong assumption that contradicts the White House’s own assumption about faster growth. This is a risk for US bonds. Bond traders tend to be more forgiving of US indiscipline than other nations, but that will be tested if Trump expands a stretched deficit.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

13^th April 2026

Please see below, Brooks Macdonald’s Daily Investment Bulletin providing a brief analysis of the key factors currently affecting global investment markets. Received today – 10/04/2026

What has happened?

The prospect of continued de‑escalation supported a risk‑on tone across markets yesterday. The S&P 500 rising +0.62% to reach a one‑month high. This marked the index’s 7^th consecutive gain, leaving it less than 2.5% below its late‑January record high. Leadership came from the Mag-7 (+1.58%), while gains were broad‑based across most sectors. The main exceptions were software & services (‑2.18%) and energy (‑1.19%). Improved sentiment also fed through to rates markets. Investors grew more confident that the Federal Reserve could still deliver rate cuts later this year, with markets now pricing a 33% probability of a cut by the December meeting. In contrast, European equities underperformed modestly, giving back some of Wednesday’s strong gains. The STOXX 600 slipped -0.15%. Renewed concerns around the inflation outlook pushed the 1‑year euro inflation swap up 12.2bps to 3.23%, while Brent oil price had risen +1.23% to $95.92/bbl.

Ceasefire optimism gains traction

Markets were buoyed primarily by geopolitical developments. Reports that Israel would begin direct talks with Lebanon as soon as possible, alongside comments from President Trump suggesting Israel was scaling back operations, helped ease fears of a broader regional escalation. Lebanon had been viewed as a potential flashpoint, particularly following evacuation orders issued in parts of Beirut and sharp rhetoric from Iranian officials. Against that backdrop, tentative progress toward dialogue reduced the risk that the ceasefire could unravel ahead of this weekend’s talks.

Backward‑looking data offers limited reassurance

US economic data released yesterday highlighted lingering inflation pressures. February PCE inflation, the Fed’s preferred measure, came in as expected at 0.4% m‑o‑m for both headline and core. Year‑on‑year, headline PCE held at 2.8%, while core eased slightly to 3.0%, which is still comfortably above the Fed’s 2% target, even before recent energy‑related disruptions. Elsewhere, initial jobless claims rose more than expected to 219k, while Q4 GDP growth was revised down again to an annualised 0.5%, highlighting a slowing backdrop.

What does Brooks Macdonald think?

Although oil prices have eased since the ceasefire announcement, inflation concerns remain elevated. That keeps the focus firmly on today’s US CPI release for March, which is the first inflation print to include the period since the Iran conflict began at the end of February. The data will be closely watched for signs of renewed energy‑driven price pressures and potential second‑round effects. While markets have welcomed tentative geopolitical progress, inflation dynamics remain the key constraint for central banks. This reinforces the importance of maintaining balanced portfolios and avoiding over‑reaction to short‑term market optimism.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

10^th April 2026

Please see todays Daily Update from EPIC Investment Partners received this morning (09/04/2026):

With Pakistan successfully brokering a fragile peace, the relief rally we have seen across asset classes points to some hope of a return to a more recognisable macro environment.

The main market focus remains on oil and LNG supplies (or lack of them) and the immediate impact on petrol and diesel prices. However, there are a host of other oil and gas derived products which, unsurprisingly, have also seen sharp price rises.

One of the more obvious is fertiliser, much in the headlines. China, India, Brazil, and the US are the largest consumers.

Elsewhere the production cost of various plastics has soared. The conflict pushed up the cost of solar-grade ethylene-vinyl acetate (EVA) by 43% in March while polyolefin elastomer (POE) resin increased 7%. These two materials are the downstream derivatives of the petrochemical product ethylene which saw a 66% price surge in March.

The solar industry accounts for more than half of the annual EVA demand, among a wide range applications including shoes, cables, and packaging. Some Chinese suppliers can produce ethylene using coal and natural gas and, in total, these sources account for roughly one third of China’s EVA requirements.

Solar module costs and pricing remain highly uncertain in the near term. The severity of the disruption depends entirely on the swift resumption of the supply chain.

For better or worse, plastic products remain crucial to most industries.

Please continue to check our blog content for advice, planning issues, and the latest investment, market and economic updates from leading investment houses.

Andrew Lloyd

09/04/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 07/04/2026.   

Markets steady as Iran deadline approaches

As another President Trump deadline approaches, markets remain calm despite dwindling energy reserves.

Key highlights

• Oil supply crisis deepens: An extended closure would push energy prices to levels where demand destruction begins, weighing on growth alongside demand for aluminium and other industrial metals.
• Market volatility driven by contradictory White House messaging: Claims of deals and “two week” wind-downs drives volatility as conflict continues.
• 6 April deadline forces market risk reduction: Iran’s response to a peace plan fell over Easter weekend, forcing risk reduction ahead of the break, particularly in European markets.

Markets remain distracted by a world in conflict

Gas and oil product prices have soared outside the U.S. since the conflict began

Source: Bloomberg

Markets return from the Easter break facing another key deadline in the U.S.–Iran war. President Trump’s original deadline for reopening the Strait of Hormuz passed over the weekend and was extended to today at 8pm local time (1am tomorrow in the UK) after which he’d promised to target desalination and power plants (the emphasis seems to have shifted to bridges and power plants).

The threat of further military escalation is real, and equity and bond markets have made and held small gains over the last week. Markets are dispassionate and consider only economic consequences rather than political or humanitarian ones.

Even so, it might seem surprising that markets have remained calm, despite depleting energy reserves and system redundancy tightening the market further. From an economic perspective, an escalating conflict and a deadlocked one have largely the same implications. In both scenarios, the Strait of Hormuz (the Strait) is already largely closed with only a few vessels passing through on Iranian terms.

An escalation of the conflict, therefore, wouldn’t necessarily impede transit any more than the current situation already does. What matters is whether it moves the situation closer to, or further away from, an open Strait. With or without escalation, the Strait can reopen shortly after the end of hostilities, which can occur whenever the U.S., as the dominant military power in the region, chooses.

With the original aims of the action having been quite loosely defined, a form of regime change has occurred, as has a form of disarmament, though the recovery of enriched uranium seems like a far harder hurdle to clear. If the U.S. were to cease hostilities, Iran might continue disrupting shipping briefly as a deterrent against future action, but would ultimately benefit more from allowing normal service to resume.

So, as long as the economic impact of the war doesn’t worsen and the economy keeps moving, maintaining hedges and short positions becomes increasingly costly, allowing markets to gradually stabilise. Most equity markets have recovered from their lows, indicating that technical support is kicking in, with last week’s sharp mid-week rally driven more by deeply oversold positioning than by any substantive change in the conflict’s trajectory.

The more consequential risk remains the Strait. An extended closure would push energy prices to levels where demand destruction begins, weighing on growth alongside demand for aluminium and other industrial metals. Brent crude traded above $115 per barrel last week, and investors are now attempting to price in the growth implications.

The oil supply picture remains precarious. Research suggests that beyond mid-April, once de-sanctioned Russian and Iranian floating crude and strategic reserve stocks are drawn down, the oil deficit could rise from 4.5/5 million barrels per day to approximately 9/9.5 million barrels per day.

On prediction markets, roughly 50% of participants expect more than 20 ships to transit the Strait by the end of April, with only about 40% expecting 30 or more – well below the pre-war average of approximately 100 ships per day. Even 30 ships per day, combined with activated pipelines in Saudi Arabia, the UAE, and Iraq, wouldn’t restore pre-war supply levels. This implies oil prices would need to remain significantly elevated to balance the market.

Elsewhere, the Houthis’ entry into the broader conflict last week – threatening Saudi oil infrastructure – prompted retaliatory strikes on two of the world’s largest aluminium smelters in the region. The producer stated it had sustained significant damage and it would take “considerable time” to bring capacity back online. For context, the Middle East accounts for approximately 9% of global aluminium production, and the two affected smelters produce around 3.2 million tonnes per year.

Gas prices have returned to levels last seen at their January peak, though they remain well below the 2022/23 extremes. The feed-through to consumer prices will take time but is now a clear risk to the inflation outlook.

European markets must now wait until tomorrow’s 1am deadline to see how the next phase of the conflict develops.

Market performance over the last quarter

Major market performance during quarter ending 31 March 2026

Source: LSEG

• Quarterly performance (to 31 March): Emerging markets were the best-performing major region over the quarter, while the U.S. was the weakest. Currency effects were material – the S&P 500 underperformed in local currency terms over the final month but outperformed in sterling total return terms due to dollar strength.
• UK motor finance: The FCA announced motor finance payouts of approximately £7.5 billion, nearly £2 billion below original estimates, with 12.1 million loans eligible for compensation of up to £829 each. This should benefit domestically focussed banks and lenders that had provisioned for higher figures.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

08/04/2026

Please see the below article from Tatton Investment Management detailing their discussions on markets over the past week. Received this morning 07/04/2026.

A seasonal central bank pivot

We start April, and the new quarter, still very much dealing with the consequences of March. Both equity and bond prices are better since the close on the last Friday in March. Perhaps surprisingly given that the spot Brent crude oil price is back above $111 per barrel, equity indices are a little better than last Thursday’s close. However, bond prices are weaker (and yields higher). The situation remains as febrile as at any point since the conflict began, with Trump’s deadline for an effective ceasefire set for Wednesday 1am BST. It does not seem likely that Iran will acquiesce.

Time is not on our side. With less than 10% of the usual shipping flow through the Straits of Hormuz, oil and gas reserves are coming under increasing pressure — particularly for Asian buyers. European diesel prices have topped €150 per barrel equivalent, double February’s levels and approaching the 2022 peak.

There has been some “good” news from central bankers this week, even if it didn’t necessarily sound that way. The Bank of England had been perceived as one of the most hawkish rate setters in this cost shock environment. On Wednesday, Andrew Bailey told Reuters that businesses currently have less ability to raise prices, and that the Bank must act in a way that doesn’t harm the economy or jobs. Of rate hike pricing, he said markets are “getting ahead of themselves.”

The noises from western central bankers have generally been less hawkish, reflecting growing concern about growth. Markets were most under pressure when funding liquidity was particularly tight early last week, as hedge funds appeared to be offloading risk positions. Things have since eased a little, with US and European high yield credit spreads around 30 basis points below their March peak.

At Tatton, we do not pretend to be geopolitical experts. Economic and financial system outcomes tend to be structural, while political outcomes derive from a relatively small number of decisions that can change quickly. The narrative will tend to present “worse-and-worser” cases — and these are only realised when problem-solving fails.

Investors have navigated many crises over the past twenty years. Perhaps they have not become complacent, but rather more realistic about the inherent positive skew in longer-term outcomes.

Using MSCI Developed World Index data since 1970, a monthly fall of 5% has occurred 61 times. The following six months have averaged a return of +4.3% across all such occasions — a reminder that the long-term return path has remained quite consistent, even if volatile in the shorter term.

Market asset returns review

Overall, March will rank as a bad month for both bonds and equities. Using the MSCI World Index as a guide, global equity performance of -5.4% places it in the bottom 10% of months since 1970. Global bonds provided some offset but still did not have a great month.

Almost everything changed the day after February markets closed. Israel and the US began the Iran campaign over the last weekend of February, and both equity and bond markets opened March trading with an immediate fall. The pattern of major weekend US-Israeli actions repeated throughout the month, leaving investors especially nervous on Fridays.

Initially, investors suspected this might resemble the 12-day war of March 2024. However, Iran’s resilient ability to reestablish command structures, halt shipping in the Straits of Hormuz, and launch damaging attacks on Gulf infrastructure changed perceptions continuously. Oil and gas prices surged to their monthly peak on the 19th, though both sides subsequently backed off the strategy of creating longer-term damage to one another.

Despite a clear move in the second half of March from Trump’s administration to seek a negotiated exit, it was only at month’s close that investors sensed a shorter-term path to the end of hostilities — and, most importantly, a resumption of oil and gas tanker shipments.

In some senses, markets fared better than one might expect. Initially, investors focused on the inflationary consequences, with bond yields rising sharply — most acutely in UK gilts, where traders suspected the UK was both more inflation-prone and fiscally more exposed to energy price rises. The major central banks kept rates unchanged but were deemed somewhat hawkish, which worsened trading liquidity. The most active participants throughout the month were hedge funds, whose large positions required significant borrowing; as borrowing costs rose, positions were reduced regardless of profitability.

US equities fell considerably less than other regions. Europe, developed Asia and emerging markets were all under greater pressure, reflecting both prior hedge fund positioning and genuine fossil fuel supply sensitivity.

Gold, having performed well as geopolitical risks were rising, fell as those risks became reality — likely a combination of leveraged speculation unwinding and liquidity needs from Middle Eastern sovereign wealth funds. The price stabilised at around $4,500.

Markets personified – insight article

Investment professionals often talk about capital markets as though they are people, with beliefs, expectations and even desires. Markets might “expect” lower interest rates or get “excited” about fiscal stimulus. This personification is ubiquitous in financial media — and in the words of philosophers Lakoff and Johnson, it is one of the “Metaphors We Live By” in the investment industry. So why do we do it?

The most famous example comes from Ben Graham’s 1949 book, The Intelligent Investor. Graham likens markets to a manic-depressive business partner called Mr Market, who in his manic episodes pays a premium for your shares, and in his depressive episodes sells his own at a discount. The calm investor can profit from his mood swings.

It is tempting to think this is just a useful analogy. Some even argue it could be socially harmful, by removing autonomy from individuals in favour of some amorphous will of the market. But it would be wrong to think of markets’ beliefs or desires as mere fiction.

Markets are dynamic information processing systems — one of the central ideas of Austrian economist Friedrich Hayek, who argued that market prices reflect the aggregate of all participants’ local and limited knowledge through a process of “spontaneous order”. This idea was highly influential on the Efficient Markets Hypothesis, which holds that it is exceptionally hard for individuals to consistently beat the market, because prices already reflect all available information.

Whether markets truly have beliefs or intentions depends partly on what you think beliefs and intentions are. Philosopher Dan Dennett argued that we can describe any system as if it has beliefs and desires, but this description is only genuinely useful for certain systems — humans, animals, governments, computers. Markets, I would argue, belong in that category.

Viewing financial markets as having beliefs — based on aggregate probabilities of future outcomes — is a very good way of predicting how they will react to new information. That does not mean what the market “thinks” is always rational or consistent. But then, are people any different? Most people predictably behave according to what they want and believe most of the time. The same, it turns out, is true for markets.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

07/04/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 31/03/2026.   

Economic uncertainty continues amid Iran war

With inflation above target and limited fiscal room, policymakers face tough choices ahead.

Key highlights

• Mixed signals over the Iran war: Contradictory statements coming from the U.S. and Iran, along with the capricious nature of President Trump, continue to make it challenging to predict outcomes in the Middle East.
• The economic impact is yet to be fully felt: Anticipated inflationary pressures and predictions of interest rate rises are set against a backdrop of general uncertainty and reduced opportunity for fiscal stimulus, leaving investors in something of a holding pattern until more clarity emerges.
• Input prices start to rise: Some indicators, most notably the purchasing managers indices, show that businesses are beginning to feel the pinch as the cost of inputs has started to rise, with a potential knock-on effect on outputs to follow.

The Iran war

The dominant theme of the last week was the Iran war and its far-reaching consequences for global energy markets, risk assets and central bank policy. Europe saw sharp equity declines as escalatory rhetoric from both Washington and Tehran rattled markets.

This followed President Trump issuing a 48-hour ultimatum, demanding the reopening of the Strait of Hormuz (the Strait) and threatening strikes on Iranian power plants. But markets rallied as this was later extended to a five-day deadline and subsequently a ten-day deadline, reflecting the president’s assertion that progress is being made in negotiations between the two parties. Iran, however, was characteristically defiant: issuing counterthreats targeting U.S. military bases, energy infrastructure of nations perceived to be assisting the U.S. war effort, desalination facilities and – notably – financial institutions holding U.S. Treasury bonds.

As the week progressed, a familiar pattern emerged: brief risk-on rallies on hints of diplomacy, followed by renewed pessimism as the facts on the ground failed to improve. Last Tuesday, President Trump posted a lengthy statement claiming “advanced negotiations” with Iran toward a “complete and total resolution of hostilities.” Iran’s foreign ministry acknowledged that messages had arrived via intermediary countries but denied any direct negotiation with Washington, stating that its stance on the Strait “has not changed.”

By last Wednesday, a 15-point plan had reportedly been transmitted via Pakistan, prompting a modest risk-on session. Iran eventually confirmed it had rejected a U.S. proposal. By Friday, the consensus among the geopolitical experts remained decidedly pessimistic regarding the scope for near-term de-escalation.

Helima Croft, Managing Director and Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, noted that despite a minor uptick in vessels transiting the Strait, she doesn’t expect anything close to a normalisation of flows. The appointment of hardliner Mohammad Bagher Zolqadr, the former commander of the Islamic Revolutionary Guard Corps (IRGC), to head Iran’s Supreme National Security Council could signal a further coalescence within the regime around an uncompromising stance.

Helima Croft, Managing Director and Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, noted that despite a minor uptick in vessels transiting the Strait, she doesn’t expect anything close to a normalisation of flows. The appointment of hardliner Mohammad Bagher Zolqadr, the former commander of the Islamic Revolutionary Guard Corps (IRGC), to head Iran’s Supreme National Security Council could signal a further coalescence within the regime around an uncompromising stance.

Escalation and leverage

A consensus exists among many observers that Iran does need to end the conflict, as it’s inflicting considerable pain on both the regime and the populace. However, the Iranian leadership wouldn’t accept a deal if they can avoid it, without first demonstrating their ability to inflict economic pain through their control of the Strait. The ability to frustrate that waterway would be the strongest means of discouraging further acts of aggression against the regime.

Historically, energy spikes and erratic acts by President Trump have been good entry points into markets ahead of what can be sharp rallies as conditions normalise. But the signs are not yet there that this is a great buying opportunity. While classic risk gauges such as the VIX have risen, they aren’t excessively elevated given the severity of the downside scenario – a possible sign that investors are reluctant to abandon their positions ahead of a possible rebound.

There are some lasting concerns too. Policymakers have significantly less bandwidth to provide support than in previous crises. Inflation has been above target in both the UK and the U.S. for approximately five years. Higher-for-longer energy prices risk de-anchoring inflation expectations, constraining central banks from easing even as growth deteriorates. There’s now an expectation that central banks will raise interest rates.

Meanwhile, elevated government indebtedness in many countries limits the scope for fiscal stimulus. In a recession, falling tax revenues and rising automatic stabiliser spending (welfare benefits) would compound the debt problem further. For now, back-channel talks continue with the hope of de-escalating the tensions.

Troop movements, however, suggest that the U.S. could be prepared to seize some territory (perhaps Kharg Island, through which most of Iran’s oil exports flow) or enriched uranium supplies, or to clear the coastal areas from threats to shipping. This could just be posturing, but recent history has suggested that troop movements do tend to precede deployments.

UK firms start to feel a costs pinch

European markets remain understandably pre-occupied by the Middle Eastern conflict, and specifically the impact on energy prices, which makes the UK’s official consumer price index statement seem less important overall. However, some data, such as the purchasing managers indices (PMIs), remain relevant.

Because they’re based upon companies’ surveyed responses since the outbreak of the conflict, the PMIs confirm that businesses are experiencing the fastest acceleration in input prices since 2023. This was most pronounced in manufacturing, but services output prices were affected too, although not enough to immediately offset the higher input costs.

The tone from policymakers has remained hawkish. Bank of England Chief Economist Huw Pill discussed how uncertainty shouldn’t be used as an excuse not to act to contain inflation. Fellow Monetary Policy Committee member Megan Greene discussed how there will be lasting inflationary effects from the conflict even in a “best-case” scenario.

More UK firms raised output prices in March

Source: Bloomberg

By contrast, Deputy Governor Sarah Breedon did acknowledge that second-round effects would be less likely now than in 2022, due to the weaker labour market. That is unquestionably true, but, having spent most of the last four years missing the inflation target materially to the upside, policymakers feel compelled to err on the side of the hawks.

Sectors to be impacted differently?

Throughout Europe, the pass-through of higher energy prices affects companies via changes in monetary policy and more directly as well. High bond yields mean lower real estate valuations as well as less deal flow, because the financing costs for new deals have risen. European real estate sector yields, which had fallen to their lowest since 2022, have risen to their highest since 2023.

Sectors such as consumer services and retail, on the other hand, will see less volume growth because of the real income compression from energy price inflation. Price earnings ratios are at the lower end of their range but don’t currently stand out.

All these factors combine to affect auto sales, where financing costs, running costs and general economic confidence are all relevant considerations.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

01/04/2026

Please see below article received from Brooks Macdonald this afternoon.

What has happened?

Energy markets remained a focal point, with Brent crude ending the session broadly flat but still edging up +0.2% to $112.78/bbl, which was its highest close since July 2022. Equity markets were initially more constructive. European stocks outperformed, with the STOXX 600 (+0.9%), FTSE 100 (+1.6%) and DAX (+1.2%) all posting solid gains, helped by a firmer energy sector and resilient financials. That positive tone did not carry through to the US close. The S&P 500 finished -0.4% lower, leaving the index around 9% below its late‑January peak and within touching distance of technical correction territory. Yesterday’s weakness was narrowly concentrated, led by a sharp sell‑off in semiconductor stocks (the Philadelphia Semiconductor Index fell -4.2%) even as the majority of S&P 500 constituents ended the day higher. Sentiments improved overnight, with futures markets responding positively to reports suggesting the US may be open to end its military campaign against Iran.

Hints of de‑escalation but uncertainty remains

Overnight sentiment was buoyed by a Wall Street Journal report indicating that President Trump is willing to end US military operations against Iran even if the Strait of Hormuz remains partially disrupted. According to the report, US officials judged that a sustained effort to reopen the strait would risk prolonging the conflict beyond a four‑to‑six‑week horizon. Instead, the apparent focus is on degrading Iran’s naval and missile capabilities while increasing diplomatic pressure to restore trade flows. Markets took this as a modest positive, as it raised the perceived likelihood of a contained conflict and reduced the risk of more severe outcomes, such as widespread damage to regional energy infrastructure. That said, the messaging has been mixed. Yesterday, President Trump posted that the US could target Iranian power plants, oil fields and Kharg Island if negotiations fail, while also signalling that discussions were under way with a potentially more accommodating regime. Adding to the diplomatic complexity, Pakistan’s foreign minister is due to visit China following meetings with Middle Eastern counterparts, prompting speculation that Beijing could play a future role in supporting any ceasefire process.

What does Brooks Macdonald think?

Amid heightened geopolitical noise, monetary policy signals offered a measure of reassurance. Fed Chair Jerome Powell struck a dovish tone, noting that inflation expectations remain “well anchored beyond the short term.” This reinforced the view that central banks remain attentive to growth risks and are unlikely to overreact to near‑term volatility in energy prices or markets more broadly. We continue to monitor developments around energy supply, diplomatic progress, and financial conditions, but we would caution against drawing strong conclusions from short‑term market moves driven by rapidly evolving newsflow.

Please check in again with us soon for further relevant content and market news.

Chloe

31/03/2026

Please see the below article from Tatton Investment Management detailing their discussions on markets, gas supply chain, and gold. Received this morning 30/03/2026.

Markets hold their breath

Donald Trump’s ‘peace plan’ for Iran and the negotiations via Pakistan gave markets a smidgen of positivity. TACO traders were not surprised that Washington postponed last weekend’s ultimatum (reopen the Strait of Hormuz or see energy infrastructure destroyed) but it suggests the existence of a boundary around attacking energy infrastructure. Still, a halt to escalation doesn’t mean de-escalation: the US is still sending thousands of troops to the Middle East, and Tehran clearly doesn’t believe the peace plan is real (neither do betting markets). It’s a soggy TACO at best, and in the meantime oil and gas still can’t clear the Strait. As the week’s trading begins, Brent has reached a new recent high, just above $116 per barrel for the front month delivery of May. If this continues, energy prices will climb even further and global growth will be harder hit.

The first business sentiment surveys since the war began confirmed that European and Asian companies are worse hit than their American counterparts – as you’d expect with sharply different supply dependencies. Lower growth expectations should mean lower bond yields but, with the exception of China, the opposite has happened. Bond traders are pricing in a big inflation shock, but a curiously low growth impact (judging by real yields). That could change. Even though central banks two weeks ago sounded the inflation alarm, last week they turned more growth conscious and so long-term yields might take the hint and fall in due course.

That easier central bank messaging loosened the liquidity squeeze, which is another reason stocks found some relief early last week. We saw that in gold prices too (covered below). Holders of speculative assets are under less pressure – even the ailing private credit sector. Thankfully, there’s no sign of contagion to publicly traded bonds from recent private credit fund closures. This is all good news, but could change this week. It’s the quarter-end, financial year-end, and Easter weekend to boot. Light trading means tighter liquidity, potentially amplifying small selloffs. Things could therefore get nervy this week, if only for technical reasons. For now, markets are in stasis.

Europe’s surprising gas supply

European natural gas prices have risen around 55% during Iran war – but US prices are about the same. Europe’s gas premium over the US fell through 2025, but disrupted Middle Eastern flows have left Europe paying more than six times the US. Since 2022, Europe has become increasingly reliant on Liquid Natural Gas (LNG) imports, mostly from the US. (Norway provides more gas overall, but US LNG is often the swing factor). Now, LNG shipments across the Atlantic seem to be at capacity. That means oversupply in the US, and undersupply here and on the continent.

And yet, Europe’s gas storage position has actually improved, on a seasonally-adjusted basis, in the last few weeks. European gas storage was running at the low end of its seasonal range pre-war – partly due to a cold snap and partly due to LNG shipments allowing a ‘just-in-time’ model of gas provision. We noted in February that Europe’s underlying supply balance was improving, and that’s continued despite everything. That’s all about the weather. An early spring lessens heating needs and ends the dreaded ‘Dunkelflaute’ (no wind or sun), meaning renewables have been able to pick up more of the slack.

That suggests Europe’s gas price spike is more about fear of disruption than disruption itself. However well-founded those fears, this means that de-escalation in the Middle East (without long-term production damage) would see gas prices flip back toward oversupply. Russian gas flow has also been relatively undisturbed in the last few weeks, as Washington seems more relaxed about Russian oil and gas exports. European leaders won’t like that, but it does point to a better gas price outlook than feared.

Energy prices are crucial to Europe’s outlook. Comparatively low US prices have seen US stocks fare relatively better in recent weeks, but de-escalation could quickly turn that around.

Gold’s not-so-safe haven

Gold, the stereotypical ‘safe haven’ asset, has fallen sharply since the outbreak of the Iran war. This might be the natural disaster effect: if you hold safe assets for a rainy day, you sell them when it starts to rain. That’s why gold often sells off in market panics – and it’s exacerbated by the previous two-year rally. It’s become correlated with speculative assets, making prices more volatile. An inflationary oil shock should mean higher gold prices but higher expected interest rates counteracts that. Gold has become something of a liquidity drain post-pandemic. Central bank tightening would mean less liquidity, hence weaker gold.

Speculative trading amplified the fall, but what triggered it? It seems to have been the rumour that central banks or sovereign wealth funds might sell gold reserves – most likely gulf nations needing liquidity while oil exports are blocked. That’s the opposite of what happened post-Ukraine. From 2022, central banks (particularly emerging markets) built gold reserves out of fear they, like Russia, might be frozen out of the global dollar system. But historically high gold prices are a good opportunity to cash in. There’s no evidence that’s actually happening (though there wouldn’t be) but the rumour prompted selling.

Volatility doesn’t undermine gold’s safe haven status. A safe haven asset is something real you can sell in a disaster; a safe haven trade is a bet that something will make you money in times of panic. Recent gold price volatility certainly doesn’t take away gold’s safe haven status, and history suggests the safe haven trade rarely works anyway. This is the same reason we have always argued against gold as an investment (even when it was surging): it’s impossible to value in the same way as stocks or bonds. There’s a good chance gold recovers from the selloff, but we will continue to prefer traditional investment assets.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

30/03/2026