The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- Israel-Iran conflict threatens global trade and stability – markets struggled to digest the impact of the current Middle East crisis. The entire Gulf region is caught up in the hostilities, with no end in sight. Over 1,000 deaths have been reported so far, and shipping traffic through the Strait of Hormuz, perhaps the world’s most critical energy choke point, has ground to a halt.
- Oil and gas prices surge – crude prices are set for close to a 20% weekly gain, with prices hitting their highest levels since April 2024. European wholesale gas prices have soared over 40% since Qatar’s suspension of LNG output.
- US Navy to escort tankers – US President Trump announced that the US Navy will soon begin escorting tankers through the Strait of Hormuz, and the US International Development Finance Corporation would offer insurance at “a very reasonable price”.
- Tech and US dollar safe havens amongst turmoil – the US dollar posted a weekly gain of 1.5%, its strongest in over a year. The Pound, Euro and Yen retreated as markets reassessed inflation risks from higher energy prices. U.S. tech stocks—particularly large‑cap, cash‑rich names—also showed resilience amongst broad market turbulence.
- Calm Spring Statement – Chancellor Rachel Reeves delivered a low‑key Spring Statement, outlining improved public finances with borrowing nearly £18bn lower than in the August forecast. Unemployment is expected to peak at 5.3% this year, with inflation anticipated to fall to 2.3%. However, the forecasts by the Office for Budget Responsibility (OBR) were made before the events of the past week.
What this means for financial advisers and clients
The disruption in the Strait of Hormuz matters because it sits at the centre of the global energy system. 20% of the world’s oil, and a major share of Qatari LNG exports move through this narrow channel. This makes it one of the most strategically sensitive trade routes in the world. When tensions escalate, markets quickly price in the risk of supply disruption.
That’s exactly what we’re seeing now. Energy importing nations across Asia are heavily exposed to any blockage in the strait, and that vulnerability is feeding into global markets. Rising oil and gas prices have pushed inflation expectations higher, lifted government bond yields, and dampened sentiment in equities linked to travel, consumer spending, and global manufacturing.
For UK investors, the impact is already showing up in gilt markets, which rose over 30bps to 4.55%, and the pound which dropped to its weakest level against the dollar this year.
Inflation concerns have also reduced expectations for near term Bank of England rate cuts. UK money markets are now pricing less than a 20% chance of a cut this month. UK rate futures are showing less than a 50% chance of a single cut by the end of 2026.
The bigger question is whether this becomes a temporary shock or a more persistent source of inflation pressure. For now, markets are adjusting to the possibility that interest rates may need to stay higher for longer. That doesn’t change the long term case for diversified portfolios, but it does reinforce the value of balance—between regions, sectors, and asset classes—at a time when geopolitics is once again exerting a powerful influence on markets.
Chart of the week - Significant global energy flows through Hormuz
Source: Bloomberg
Why’s this worth sharing?
The chart highlights the scale of global energy traded through the Hormuz Strait.
Unfortunately, there’s very little scope to reroute these flows whilst the Strait remains closed. Saudi Arabia can divert shipments by using a pipeline to a terminal on the Red Sea; but it has limited capacity.
However, the real bottleneck isn’t getting oil out — it’s getting empty tankers in. Storage space is nearly exhausted, and with crude output still running, producers have relied on stranded tankers to absorb supply. Once those vessels fill up, countries must shift to limited onshore storage, forcing production cuts.
As pressure increases to resume trade, the US plans to provide insurance and protection to ships through the Strait will be tested in the coming days.
The Markets
FTSE falls
The FTSE’s weekly drop was largely macro-driven rather than company-specific, reflecting geopolitical risk, surging oil prices and rising bond yields. Heavyweights in mining, banks and consumer staples dragged the index lower. Energy and defence stocks provided the few bright spots in an otherwise risk-off market environment.
S&P slips
Energy was the strongest sector over the week as oil prices surged. Select technology and semiconductor stocks also saw intermittent rebounds midweek as investors bought the dip. Broadcom rose nearly 5% after strong forecasts for demand tied to artificial-intelligence chips. Airline and travel-related stocks declined sharply early in the week due to oil-price sensitivity.
European equities slide
European equities saw heavy selling in travel, industrial and consumer‑cyclical stocks, with airlines seeing the sharpest declines – Lufthansa, Air France‑KLM, TUI all dropped between 6–9%.
Emerging woes for EM equities
Whilst the sell-off has been uneven across the globe, the dominance of Asian countries in emerging market equities contributed to a fall at the index level. South Korea was one of the hardest-hit markets, reflecting its dependence on imported energy. The benchmark KOSPI lost nearly 20% across Tuesday and Wednesday, before rebounding 10% on Thursday. Higher oil and raw-material prices supported commodity exporters such as Brazil and Chile.
Gold wobbles
Gold’s decline this week, snapping a four-week rally, was less about a collapse in safe-haven demand and more about macro-financial forces—a stronger dollar, and markets focused on inflation risks linked to higher oil prices.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -4.48% | 5.30% |
| FTSE 250 | -4.40% | 1.41% |
| S&P 500 | 0.23% | 0.90% |
| NASDAQ | 1.43% | 0.17% |
| FTSE Developed Europe Ex-UK | -5.95% | 0.89% |
| FTSE Emerging Markets | -4.32% | 3.70% |
| FTSE Japan | -6.03% | 9.03% |
| Brent Crude | 16.48% | 39.83% |
| Gold Spot | -2.50% | 18.64% |
| UK 10yr Gilt yield | +24bps | +7bps |
| US 10yr Treasury yield | +18bps | -1bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 5th March 2026.
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