Nicolas Laroche

As the Middle East conflict enters its fifth week, recent developments are pointing to a clear shift from an initial oil disruption towards a broadening supply shock.

The prospect of a prolonged Middle East conflict is unsettling financial markets, as investors weigh the potential macroeconomic consequences.

The outbreak of a new Middle East conflict involving the US, Israel, and Iran rattled financial markets last week, triggering a broad risk-off shift.

The developments in the Middle East over the weekend mark an expanded regionalisation of previous conflicts, heightening the risk of a more prolonged crisis that could weigh on oil prices if tensions persist over the coming weeks.

Last Friday, the US Supreme Court ruled that the International Emergency Economic Powers Act did not give the President the authority to impose tariffs, providing a lift to global equities. However, President Trump swiftly responded by announcing his intention to apply a 15% global tariff, sending the dollar lower and gold higher as markets moved to price in renewed trade uncertainty.

Global markets remained broadly stable despite ongoing sector rotation and mixed macroeconomic signals.

Global equities navigated a volatile week with limited damage. Although investors appear to be recalibrating risk exposures, the earnings season continues to underscore that EPS growth remains firmly driven by the technology sector.

The nomination of Kevin Warsh to serve as the next Chair of the Federal Reserve from May pushed the US dollar slightly higher, while gold and silver fell sharply in a deleveraging move that began in Asia.

As we head into 2026, emerging market (EM) bonds offer a solid opportunity, backed by improved fundamentals, positive technicals, and attractive all-in yields thanks to high baseline Treasury levels.