Michaël Lok

The Swiss franc is once again confirming its status as a major reserve currency, one that is particularly significant at a time when instability in the Middle East is causing major turbulence in global geopolitics. However, the franc’s secular strength has a downside.

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

As a new global order takes shape and regime-change dynamics heighten geopolitical risks, gold remains a strategic allocation amid rising Middle East tensions, while disciplined risk management helps to contain drawdowns.

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.

Despite rising geopolitical tensions, the underlying macroeconomic backdrop remains supportive of risky assets, with US technology, high-yield bonds, and gold continuing to anchor our allocations.

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.