Public Markets 3 Days

Last updated: March 26, 2026, 11:30 AM ET

Geopolitical Tensions Drive Energy Markets and Defense Spending

Escalating hostilities in the Middle East continue to dominate market sentiment, pushing US stock-index futures to decline on Thursday as hopes for a swift ceasefire faded, while oil prices again surpassed the $100 mark. The impact is clearly visible across the energy sector, with Total Energies launching one of its largest-ever buying sprees for Middle Eastern crude, further fueling market turmoil, and prompting warnings from Chevron that California risks a fuel crisis unless taxes and regulations are rolled back amid the conflict. Furthermore, the global consequences are manifesting in inflation forecasts, as the OECD now projects US price growth will surge to 4.2% due to the energy shock, a figure that mirrors concerns in Europe where French inflation is expected to accelerate to 2% next month.

The defense sector is experiencing a corresponding surge in interest, evidenced by missile manufacturer MBDA planning a 40% production increase this year to satisfy soaring demand from Gulf nations amid ongoing regional strikes. This trend is reflected in U.S. investment strategies, where Bank of America is shifting focus to air defense firms over traditional armor makers, prioritizing missile systems and drones following the conflict’s impact. Meanwhile, the security situation is causing tangible delays in resource development abroad; Barrick Gold has postponed its $9 billion Pakistan mega mine due to worsening local security tied to the Middle East war. On the consumer front, high energy prices are forcing government intervention, with Poland planning tax cuts and price caps to shield citizens from rising fuel costs.

Fixed Income, Sovereign Debt, and Monetary Policy Crosscurrents

Global fixed-income markets experienced a broad selloff, with Treasury yields rising as military tensions persisted, complicating upcoming debt issuance, as evidenced by the balky investor demand facing a seven-year bond auction. This volatility is also affecting regional bond markets, where European debt is expected to struggle in a swift rebound even if the conflict ends quickly. In Europe, the debate over monetary integration continues, with the case for Sweden adopting the euro appearing less definitive than in previous decades, even as the project for a digital euro clears a major technical hurdle. In emerging markets, Ghana plans to re-enter the local currency market next week by selling its first Cedi-denominated bond since defaulting in 2022 to finance its budget. Elsewhere, a pathway is opening for European holders of Russian foreign currency bonds to finally recover payments previously frozen by sanctions via Euroclear.

Concerns over credit quality are prompting regulatory action, as the European Central Bank will initiate fresh exposure checks on supervised banks focused specifically on the private credit sector. This caution is echoed in asset flows, with investors shifting heavily into cash from both stocks and bonds, reminiscent of strategies employed following the 2022 invasion of Ukraine. Furthermore, a new Federal Reserve study indicates that US states legalizing sports betting have seen increased credit delinquency, linking increased gambling activity to consumer financial stress.

Corporate Finance, Valuations, and Sector Moves

Wall Street’s compensation packages remain exceptionally high, with the average banker bonus nearing $250,000, although these figures fell short of projections made by New York City budget officials. In dealmaking, Corebridge Financial and Equitable Holdings have agreed to an all-stock merger creating a combined entity valued at $22 billion, capitalizing on the trend of private capital groups targeting assets held by US insurers. Meanwhile, the tech sector continues to grapple with regulatory oversight; social media platforms Snapchat and several pornographic sites face EU scrutiny over inadequate child safety and age-verification systems. The uncertainty surrounding the Middle East conflict is also impacting corporate decision-making, as seen by Japan recording its longest streak of first-day IPO flops since 2020, reflecting shaken investor sentiment.

In commodities and energy infrastructure, the war has exacerbated supply issues, causing Europe’s natural gas stores to dwindle to multi-year lows, making restocking difficult due to rising prices, while Asian and European buyers chase limited US LNG cargoes after the Qatar plant shutdown. The agricultural impact is severe, with the fertilizer price surge threatening West African cocoa and cotton farmers, and experts noting that the disruption is too late to avert effects on Gulf state fertilizer exports impacting US planting season Opinion: The Iran War’s Other Energy Shortage—Food. Finally, in the world of high-stakes valuations, questions are emerging over whether SpaceX’s potential $1.75 trillion IPO valuation is justifiable given historical benchmarks set by Big Tech.

Regulatory Scrutiny and Regional Economic Health

Regulatory actions are intensifying across multiple sectors, with the US Justice Department planning an antitrust lawsuit against NewYork-Presbyterian hospital system over its contracts with insurers. In the technology space, following recent courtroom setbacks, Big Tech firms like Meta and Google face uncertain territory amid lawsuits and user restrictions. Activist investors are also making their presence felt, as Elliott Management applies pressure to Synopsys to boost future profits. Economically, the outlook dims for major economies under the conflict’s shadow; German officials fear the nation’s growth rate could halve if the Iran crisis persists, while Poland’s Prime Minister has vowed to implement fuel tax cuts to shield consumers. Regarding infrastructure investment, the US government is moving to secure supply chains by having the US International Development Finance Corp. take a 20% equity stake in graphite miner Syrah Resources Ltd.