The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- The US/Israel-Iran war enters week two – the crucial Strait of Hormuz, which carries around 20% of global oil, remains effectively shut as Iran appoints new loyalist Supreme Leader and attacks escalate throughout the Gulf.
- IEA to release 400m barrels of oil – the International Energy Agency, which coordinates on behalf of OECD countries, has agreed to release 400m barrels from its emergency reserves – its largest ever intervention - in an attempt to moderate the current oil price volatility.
- US inflation steady in February – annual inflation held at 2.4%, unchanged from January, as energy prices rebounded while the cost of used cars and trucks fell. This of course doesn’t yet reflect the impact of the Iran conflict.
- UK economy stalls – the country saw no GDP growth in January following a big slump in employment activity and rental and leasing. This comes despite an uptick in water supply activities and manufacturing
- Chinese inflation jumps – annual inflation figures rose to 1.3% in February, beating market expectations at 0.8%, as the Lunar New Year holiday pushed up spending.
What this means for financial advisers and clients
As the war in Iran grinds on and global oil supplies remain restricted, we’re starting to see significant volatility in the oil market. As we’re seen throughout the week, prices tend to spike as sentiment turns negative and it looks like the war will drag on. For example, when Iran appointed a loyalist Supreme Leader, regional bombing expanded, or when Trump demanded “unconditional surrender”. Prices have fallen back when the outlook appears more optimistic, as demonstrated by recent US administration comments suggesting the war should end “very soon”.
However, despite little evidence of imminent resolution, the expectation remains that the war’s cost – and deep unpopularity – will draw Trump to declare a victory sooner rather than later.
As investors focused on the longer-term, we remain confident that normalisation and recovery will come in time, it’s just a question of when.
Chart of the week - China’s oil dependence
Source: Alpine Macro, EIA
Why’s this worth sharing?
China relies heavily on oil imports from the Middle East and is a major destination for flows out of the Strait of Hormuz. While its vast reserves mean this isn’t an immediate crisis, things would change if the fighting lingered on for months and these reserves start to dwindle - exacerbating the current oil price volatility further.
China has long been aware of its reliance on imported energy and has been moving, at scale, to diversify and improve energy security in recent years. As well as increasing emergency reserves, and building pipelines to other parts of the world, such as Russia, the country has also dramatically lowered the intensity of their oil consumption through a big push into domestic renewable energy production via solar, wind and hydropower. China is also increasingly back-stopping these measures with greater coal-power, and it remains one of the few countries continuing to invest in new coal plants.
While the current conflict is certainly bad news for China – with oil imports only making-up a small fraction of overall GDP and oil intensity continuing to fall - the country is more resilient to such shocks than ever before.
The Markets
FTSE 100 clings to gains
UK markets were hit by renewed upward expectations on interest rates and higher oil prices, although the FTSE 100 managed to stay positive thanks to boosts from defence companies and miners.
US moves turn on Iran war outlook
After gaining ground early in the week on hopes of a swift end to the Iran-conflict, markets since turned negative as these hopes faded, oil prices continued to accelerate, and the chance of imminent rate cuts fell.
Asian markets struggle
Asian market movements were also driven by the Iran conflict this week, with many economies in the region such as Japan, South Korea and China being particularly reliant on oil imports, with supply constraints and rising prices negatively impacting their stock markets.
Oil prices remain volatile
Oil prices saw large swings during the week as it reacted to a constant barrage of reports on the Iran-conflict and expectations around oil supply and capacity. Despite its role as a safe haven asset, gold prices ended lower on fears of rising interest rates.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.45% | 4.47% |
| FTSE 250 | -1.43% | -0.91% |
| S&P 500 | -0.90% | -1.61% |
| NASDAQ | -0.35% | 1.96% |
| FTSE Developed Europe Ex-UK | -0.39% | -0.86% |
| FTSE Emerging Markets | -0.34% | 2.97% |
| FTSE Japan | -2.63% | 6.29% |
| Brent Crude | 3.59% | 66.90% |
| Gold Spot | -1.97% | 18.36% |
| UK 10yr Gilt yield | +25bps | +27bps |
| US 10yr Treasury yield | +14bps | +8bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 12th 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.
