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Last updated: April 7, 2026, 8:30 AM ET

Geopolitical Tensions Drive Energy and Risk Asset Volatility

Markets remained on edge as President Donald Trump’s ultimatum regarding Iran approached, driving crude prices higher and causing pronounced selling pressure across equity indices. The risk premium surged as Iran continued attacks across the Persian Gulf dimming peace chances despite diplomatic efforts from nations like Pakistan and Egypt ramping up diplomacy. Russian crude prices hit a 13-year high benefiting from the broader Middle East rally, while Ukraine simultaneously ramped up attacks on Russian oil infrastructure to curb Moscow’s war financing. The escalating conflict has already cost the US an estimated $500 million daily in destroyed equipment, leaving US assets exposed elsewhere.

The Strait of Hormuz remains a flashpoint, with Iran blocking LNG passages and Taiwan pivoting toward increased coal power generation to secure energy supplies amid the gas disruption culminating in supply shocks. The economic ramifications are widespread, with the UK private sector growth grinding to a halt in March amid stagflation fears, and investor confidence in the Euro-zone economy slumping to a one-year low. However, some analysts suggest the current shock is manageable; one assessment six weeks into the crisis framed the Iran war shock as being about half the size of Covid-19.

Commodity markets showed divergent reactions ahead of the deadline. While oil futures climbed higher again, Morgan Stanley assessed that the Brent complex is "stressed, not broken," noting huge premiums for prompt barrels. Conversely, copper prices showed vulnerability according to Goldman Sachs, which warned of further declines if the Strait remains closed. Gold prices, meanwhile, ticked lower as traders remained cautious, and China’s central bank continued its gold-buying spree in March despite price pressures.

Fixed Income and Sovereign Debt

In fixed income, traders are being cautioned by UBS Group AG against assuming major central banks will coordinate responses to prolonged conflict, a dynamic reminiscent of 2022 market plays. Emerging markets extended a three-day rebound as traders weighed ceasefire odds before the deadline, while Poland marked its return to international markets with a three-tranche dollar debt offer. In contrast, Mozambique’s dollar bonds slumped to a 2023 low after authorities signaled plans to seek restructuring talks with creditors. Meanwhile, Japanese 30-year bond sales saw tepid demand as investors maintained caution regarding Middle East tensions.

Inflationary pressures driven by energy costs are being felt globally. The Philippines saw inflation spike to a 20-month high in March, and Thailand’s yearlong deflationary trend is nearing an end due to rising fuel costs. In Southeast Asia, Bank Indonesia prioritized market stability, intervening as the rupiah slid to multiple record lows against the greenback. Conversely, the Czech Republic’s inflation accelerated less than expected, remaining below target as policymakers assess the broader impact of pricier fuels.

Corporate Finance and Asset Management

The private credit sector saw continued fundraising despite warnings about potential losses. Blackstone successfully raised $10 billion for its latest opportunistic credit fund, signaling sustained institutional appetite for private debt upheaval. However, JPMorgan’s Jamie Dimon angered rivals by reiterating warnings that private credit losses will be higher than generally anticipated. In wealth management, Citi set aggressive new targets for bankers as its business has lagged peers, while Morgan Stanley is proceeding with plans for a new interval fund focused on private credit despite facing record redemption requests from retail vehicles.

The technology and aerospace sectors showed notable activity. The market debut anticipation for SpaceX prompted a record surge in inflows into smaller space-focused ETFs, with bankers working hard to secure roles in the potential listing earning back-scratching praise. In AI, Anthropic secured massive chip deals with Google and Broadcom, projecting annualized revenues of $30 billion, and is reportedly in talks to invest $200 million in a new private-equity venture alongside firms like Blackstone. Meanwhile, Samsung projected an eightfold jump in first-quarter operating profit, driven by demand for semiconductors fueled by the AI boom, despite energy cost increases.

Other Market Moves

In corporate leadership changes, Air India’s CEO Campbell Wilson resigned following a turbulent tenure marred by a fatal crash, marking another setback for the carrier. In Europe, the Italian government is reportedly poised to replace the CEO of defense group Leonardo, whose term expires next month after overseeing an order surge. In the asset management space, H.I.G. Capital appointed Brian Schwartz as its first non-founder CEO. Elsewhere, the collapse of a Mauritian lender was linked to the nickel fraud mastermind who previously targeted Trafigura Group.