Market developments
Equities: Global equity markets experienced significant volatility and broad-based declines during the week as escalating tensions in the Middle East drove investor concerns about inflation and economic growth. European markets were hit particularly hard, with the Stoxx Europe 600 Index suffering a monthly loss of ~9%, its biggest decline since the pandemic in 2020. Markets remained under pressure on Friday over concerns that a protracted war would keep oil prices elevated, which fueled both inflation increases and growth slowdowns.
Fixed Income: A trio of US government auctions for two, five and seven-year securities drew relatively poor demand, signaling investor fatigue with market volatility from failed diplomatic attempts to end the Iran conflict. The selloff reflected a shift in investor positioning as concerns about growth were abruptly replaced by inflation fears following the outbreak of hostilities.
Commodities: Commodity markets were dominated by extreme volatility in oil prices as geopolitical developments in the Middle East whipsawed traders throughout the week. Goldman Sachs raised its 2026 Brent crude forecast to $85 per barrel from $77, citing a prolonged disruption of energy flows through the Strait of Hormuz and what it defined as the “largest oil supply shock ever”. Gold experienced a dramatic selloff, falling around 15% since the start of the Middle East conflict after nine consecutive daily declines, as elevated energy prices raised inflationary risks and prompted investors to ditch liquid positions in favour of other assets.