Markets fell on Monday as investors reacted to developments in the Middle East and rising oil prices, which reignited concerns about renewed energy‑driven inflation. Oil briefly surged to nearly $120 per barrel, its highest level since the 2022 Russian invasion of Ukraine. Later in the day, however, prices plunged back below $90 after President Trump announced he was considering seizing control of the Strait of Hormuz, the world’s most critical oil‑shipping chokepoint. His comments, along with the sharp drop in oil prices, appeared to reassure investors, prompting markets to rally on Tuesday. President Trump has expressed strong confidence that the war with Iran will end soon, despite the conflict now entering its second week. U.S. officials report that 16 Iranian mine‑laying vessels have been destroyed in recent days as fighting intensifies. Iran, meanwhile, has continued to launch attacks across the region, further raising tensions. This rebound suggests that investors may be beginning to price in the possibility of a more contained conflict, rather than a prolonged regional escalation. Even so, markets opened lower again today, reflecting continued uncertainty in the short term.
After previously floating the idea of a friendly takeover, President Trump said this week that Cuba is in “deep trouble” from a humanitarian perspective. The country has recently faced a series of challenges, including widespread blackouts and fuel shortages, prompting the government to introduce rationing measures. , a move that could provide some relief as reports on the ground indicate the crisis there is worsening.
In China, the trade surplus for the combined January–February period reached a record $213.62bn, with both exports and imports significantly surpassing expectations. While trade with the US declined slightly, trade with the EU rose to 19.9%. The shift in trade flows suggests Chinese exporters may be increasingly redirecting goods toward other major markets, particularly Europe, as tariffs continue to weigh on trade with the United States. Authorities also acknowledged the recent impact of US tariffs during the country’s ‘two sessions’ meetings, where they lowered the region’s growth forecast to 4.5% for 2026. Analysts have described the target as modest and potentially achievable, given heightened geopolitical tensions this year and ongoing adjustments in trade agreements.
In the UK, the British Retail Consortium reported on Tuesday that consumer spending growth slowed in February. Sales at major retailers rose by 1.1%, easing from January’s stronger 2.7% increase as some shoppers remained cautious with discretionary spending. Retailers, however, remain hopeful that demand will strengthen as the spring months progress, supported by seasonal spending and improving consumer sentiment. While the BRC’s chief executive noted that geopolitical tensions in the Middle East may be weighing slightly on confidence, the slowdown could reflect short-term caution rather than a broader deterioration in consumer activity.
Still to come this week we have a raft of US data including CPI, jobs data and GDP.
Nicola Tune, Portfolio Specialist
