The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- War escalates – the targeting of gas fields in Iran and Qatar in recent days represents an escalation in the Middle East conflict. The Iranian missile strike on the Ras Laffan complex caused extensive damage to the world’s largest liquefied natural gas (LNG) plant, that'll take 3-5 years to repair. Israel and the US have since pledged to spare energy sites from future strikes.
- UK interest rates held at 3.75% – the Bank of England (BoE) kept interest rates at their current level, and warned that the war could push inflation to 3.5% this summer. JP Morgan now predict the Bank will opt to raise interest rates at least twice this year, with the first rise estimated to arrive next month.
- US interest rates held at 3.5-3.75% – Federal Reserve (Fed) officials kept interest rates unchanged and maintained their forecast for one cut this year amid heightened uncertainty due to war in the Middle East. Chair Jerome Powell said the upward risks for inflation and the downward risks for employment put the Fed in a difficult position.
- European interest rates held at 2% – the European Central Bank (ECB) left its deposit rate at 2%, amid concerns the ongoing conflict could drive up inflation through higher energy prices. Governing Council member Joachim Nagel says the ECB will need to consider hiking interest rates as soon as next month if price pressures build further.
- Bullish Nvidia developer conference – CEO Jensen Huang said he expects $1trn in purchase orders for Nvidia’s Blackwell and Vera Rubin systems through 2027.
What this means for financial advisers and clients
In response to the uncertainty, major central banks - including the Fed, ECB, and BoE - have held interest rates steady while signalling growing concern about inflation. Fed Chair Jerome Powell even remarked that if there were ever a good time to skip projections, this would be it, as they just don’t know what the effects of this conflict will be.
It’s just as hard for investors to have conviction about what'll happen next, so in a similar vein to the approach taken by central bankers, it may be better to make no move rather than the wrong move at times like this. That can be hard to do if you're particularly exposed to an area of weakness or over-risked, which is why we've always advocated for diversified, risk-controlled exposures designed for long-term investing.
Chart of the week - Diversified Alternatives filling the gap
Source: Parmenion,
Why’s this worth sharing?
The chart above highlights global bond and global equity performance so far in 2026 versus Parmenion’s Diversified Alternatives asset class. Diversified Alternatives is a unique blend of funds selected specifically to provide diversification against bonds and equities when combined together. At Parmenion we use this asset class across all of our solutions (other than ex. Alts).
Bonds and equities often perform differently but there are occasions where bonds fail to protect against struggling equity markets, such as in 2022 when correlations converged. We're seeing a similar pattern play out so far in 2026, and particularly so since the onset of hostilities in the Middle East. Energy supply has been disrupted greatly over the conflict, and this has already led to a spike in the price of oil. Equities and bonds have also sold off since the start of the crisis. And as you can see in the chart the MSCI World index is now down by -1.57% year to date, whereas Parmenion Diversified Alternatives is up by 7.19%.
Diversified Alternatives has exposure to commodities, which was increased at the end of 2025. It also has exposure to infrastructure, trend-following strategies, volatility, and absolute return. These exposures perform well at different times to one another and are being used in combination to provide a smooth return profile across different scenarios.
The Markets
FTSE falls on energy driven inflation fears
The expectations of a weaker economy brought about by higher energy costs and interest rates hit a number of cyclical sectors this week, including banks, travel, industrials, and insurers. Miners also fell in line with the sell-off in precious metals.
S&P mixed
US investments are down this week for UK investors, however, this is largely due to the strengthening of the pound. In US dollar terms the index was fairly flat over the week, with energy stocks and LNG exporters benefitting from supply disruptions and offsetting broad weakness elsewhere.
Oil in focus
Brent crude prices briefly surged above $119 a barrel yesterday before pulling back below $110. Benchmark Dubai crude spiked to a record $166.80, reflecting the unprecedented tightness in real‑world supply. Saudi Arabia fears oil could hit $180 a barrel if the war continues beyond April.
Gold woes
Gold fell sharply this week as markets repriced interest rates for central banks across the world. The drop comes despite intensifying geopolitical tensions – conditions that would typically buoy gold. Instead, rising US Treasury yields, and a strengthening dollar have exerted downward pressure, making gold less attractive relative to interest‑bearing assets and more expensive for international buyers.
Bonds slip
A sharp rise in bond yields, particularly short-term yields following the central bank meetings, hit gilts and Treasuries this week. 2‑year gilt yields climbed to around 4.129%, up from roughly 3.52% before the recent Middle East escalation, marking the largest one‑day jump since the 2022 mini‑budget turbulence. 10‑year gilt yields also moved higher, reaching about 4.80% – a six‑ month high. On Wednesday, credit spreads – the premium investors demand to hold corporate debt over “risk-free” Treasuries – widened to levels not seen in years. Investment-grade spreads widened to 1.20%, while high-yield “junk” bond spreads surged toward 4.70%, signaling a marked decline in risk appetite.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -1.80% | 2.15% |
| FTSE 250 | -2.22% | -3.54% |
| S&P 500 | -1.27% | -2.63% |
| NASDAQ | -1.00% | -2.73% |
| FTSE Developed Europe Ex-UK | -2.54% | -3.72% |
| FTSE Emerging Markets | -1.42% | 1.03% |
| FTSE Japan | -0.63% | 5.60% |
| Brent Crude | 0.01% | 68.94% |
| Gold Spot | -8.79% | 7.61% |
| UK 10yr Gilt yield | +3bps | +39bps |
| US 10yr Treasury yield | No change | +23bps |
Source: Goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 19th March 2026.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
