Public Markets 3 Days

Last updated: March 29, 2026, 11:30 AM ET

Geopolitical Tensions & Equity Markets

Global equity markets continued their descent as the protracted Middle East conflict eroded investor patience, sending the S&P 500 down nearly 9 percent from its January apex and marking its worst weekly slide in four years. The conflict has rattled risk sentiment across asset classes, leading to a scenario where traditional 60-40 portfolios experienced their worst monthly performance since 2022, as both stocks and bonds sold off simultaneously, leaving investors with "nowhere to hide." Strategists at Goldman Sachs warned against adopting deeply bearish positions, suggesting that current market positioning could be susceptible to a short squeeze should geopolitical tensions de-escalate. Meanwhile, Wall Street banks are actively promoting "grind lower" trades, anticipating a slow, steady selloff rather than a sharp crash, as the war enters its fifth week with no swift resolution in sight.

The tech sector has been particularly vulnerable, with Microsoft tracking toward its worst quarterly showing since the 2008 global financial crisis, caught between broader market malaise and sector-specific concerns surrounding the pace of AI investment returns. As the conflict deepens, analysts predict that the economy’s buffers are rapidly diminishing, with some forecasts suggesting that oil prices could eventually spike to $200 per barrel due to supply risks. Despite the widespread market weakness, some emerging market contrarians, including TT International and Alliance Bernstein, are initiating bold buys, betting that recent selloffs present an opportune moment to capitalize on anticipated interest rate cuts.

Energy Markets & Supply Chain Shocks

The ongoing Middle East hostilities are driving significant real-world adjustments in energy procurement and supply chains, prompting nations to seek alternatives to traditional shipping routes. The Philippines’ sole refiner, Petron Corp., actively purchased 2.48 million barrels of Russian crude, actively seeking global alternatives to maintain domestic supply amid instability. Simultaneously, supply chain disruptions are rippling beyond oil and gas, affecting markets for fertilizer, semiconductors, and cotton, as the blockage of the Strait of Hormuz creates dangerous bottlenecks for global commerce. In the wake of the conflict, Asian aluminum producers suffered direct damage from Iranian attacks, underscoring the physical risks to industrial capacity in the region.

Nations are reacting to the surging cost of energy, with two Australian states temporarily offering free public transport to mitigate the impact of rising fuel prices on consumers. Countries are also re-evaluating long-term energy sources; the disruption to Persian Gulf supplies is pushing gas-importing nations to consider alternatives such as coal, solar, and nuclear power, potentially creating a windfall for U.S. and other non-Gulf exporters while testing existing energy policies. Even as some vessels, including Saudi crude bound for Pakistan navigating the Iranian coastline, demonstrate continued, albeit rare, transit through the Strait of Hormuz, the uncertainty is causing oil futures to rise on pre-weekend caution.

Fiscal Pressures & Sovereign Debt

The geopolitical shockwaves are directly translating into increased borrowing costs for governments, particularly in Europe, as markets anticipate a deterioration in public finances. Eurozone government bonds are facing one of their worst months in over a decade due to fears that the energy shock will necessitate significant fiscal intervention. France, however, managed to beat its 2025 deficit target, providing Paris some flexibility to deploy measures protecting businesses from elevated energy costs stemming from the Iran war. In contrast, India faces potential growth headwinds and a widening fiscal deficit as energy and shipping disruptions ripple across its economy, prompting the government to announce it will borrow 8.2 trillion rupees ($86.5 in the first half of the next fiscal year to manage liquidity.

In fixed income more broadly, the turmoil has led to a sharp increase in Treasury yields, meaning investors found little solace in bonds as inflation fears and forced selling occurred in tandem with equity losses. India’s domestic lenders are currently urging the Reserve Bank of India to relax new foreign exchange rules, warning that the measures intended to support the rupee could saddle them with substantial losses as a $30 billion unwinding looms under current regulations. Meanwhile, overseas investors, led by Pacific Investment Management Company, are increasing their holdings of Colombian local peso bonds ahead of presidential elections that may bring radical government change.

Corporate Finance & Tech Investments

In corporate news, the race for artificial intelligence supremacy continues to absorb massive capital flows, exemplified by SoftBank securing a record $40 billion bridge loan specifically to finance its stake in OpenAI, thereby increasing its overall debt burden. Across the tech sphere, the focus on AI is leading to structural shifts, with some Silicon Valley executives embracing "tiny teams" of just one person augmented by AI, signaling a move toward smaller, more agile development units as AI handles more tasks. In the pharmaceutical sector, global players are aggressively hunting for new drug development hubs in China, evidenced by Eli Lilly’s impending $2 billion deal with a Hong Kong biotech firm. Separately, the stablecoin issuer Tether has hired both KPMG and PwC to audit its systems as it prepares for expansion into the U.S. market.

In M&A activity, CrossCountry Mortgage successfully acquired Two Harbors Investment, outbidding UWM Holdings for the merger agreement, while Norwegian Cruise Line Holdings agreed to reshape its board following a truce with activist investor Elliott Investment Management. On the infrastructure side, the UK is seeing defense tech start-ups consider relocating abroad due to slow progress in securing government contracts, raising concerns that the nation risks losing innovative companies. In Asia, Indian conglomerate Vedanta plans a massive five-way split next month, with the chair suggesting the combined new entities could command a valuation as high as $50 billion following a recent deleveraging drive across the group.

Commodities, Trade, and Inflation Dynamics

The sustained conflict is forcing a global reckoning on energy dependency and trade routes, which is simultaneously boosting some commodity prices while hurting others. Copper, however, posted its first weekly gain this month, supported by tentative signs of rebounding demand emanating from China. The energy shock is disproportionately hurting developing economies, which are more reliant on energy imports, leading to concerns about widespread inflation as central bankers navigate difficult choices. In response to rising costs, China has initiated trade probes against US practices, retaliating against similar actions by the Trump administration just ahead of an expected presidential summit between the two leaders.

In the European industrial sector, German chemical groups are managing to boost prices in the short term, benefiting from volatility over Asian peers, though they remain concerned about the long-term impact of higher energy costs. Conversely, the UK economy is showing strain, with retail sales posting their first decline in three months, even before the full economic cloud of the Iran war settles over consumer behavior. The US Environmental Protection Agency, in a move favorable to domestic agriculture, increased the mandated volume of biofuels that must be blended into the nation’s gas and diesel supplies for the coming year.