Public Markets 3 Days

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

Geopolitical Turmoil Drives Commodity & Currency Volatility

The escalating Middle East conflict, now entering its fifth week, has severely distorted energy markets, with oil prices jumping past $116 a barrel following signs of escalation involving Iran, which has reportedly activated its "resistance economy". This supply uncertainty has caused Brent crude to climb 3 per cent in early Asian trading, prompting several nations to seek alternatives, evidenced by the Philippines’ refiner Petron Corp. buying Russian crude and a potential boost for coal consumption globally, even as Australia reopened a key commodity port after cyclone damage. Beyond traditional energy, the attacks on production sites in the UAE and Bahrain caused aluminum to surge 6%, threatening supply chains for everything from semiconductors to cotton.

Currency markets reacted sharply to the heightened risk, with the Japanese yen edging away from its 2024 low after officials issued strong warnings of "decisive action" should the currency weaken further, even as the Bank of Japan’s new natural rate estimate did little to alter views. Conversely, the U.S. dollar index posted its largest monthly gain since July, confounding forecasts and risking added inflationary pressure, while emerging market currencies remained under duress; the Indian rupee was forced to hit a fresh low, compelling the Reserve Bank of India to impose forceful curbs on speculative bets as intervention costs swelled. The weakness was also felt in Asia, where the Singapore dollar consolidated but faced downward pressure while the Korean won’s depreciation prompted the CEO of the nation’s $1 trillion pension fund to suggest intervention might be required.

Fixed Income and Inflationary Pressures

Global government bonds rallied across the board as investors sought safe assets amid growing fears that the Middle East conflict will derail global economic growth, though Wall Street giants suggest markets are still underestimating the severity of a potential slowdown. In Japan, the yield curve continued its steepening trend, driven by thin liquidity, fiscal year-end positioning, and a lack of major buyers, even as the yen strengthened. Meanwhile, the threat of sustained high oil prices is reigniting inflation concerns, causing gold to fall in early trade, as consumers already grappling with high living costs face further strain, with U.S. gas prices nearing $4 a gallon and two Australian states temporarily offering free public transport to offset fuel costs.

The inflationary environment is testing central bank resolve, with the European Central Bank urged to remain agile; while one member suggested rate hikes are premature, another warned a hike would likely occur if the war persists past June, even as other ECB officials cautioned against rushing policy reactions. In the UK, consumer spending is already slowing, with retail sales posting their first drop since November before the full impact of the oil shock hit, prompting the UK Chancellor to urge G7 allies to avoid energy protectionism.

Equities and Dealmaking Turbulence

Asian equities broadly declined on fears that a prolonged regional conflict would stunt growth, leading Japanese stocks to slide amid heightened oil risk, though Canadian markets bucked the trend, with Toronto stocks rising on gains in oil and gold. Wall Street strategists are advising clients on "grind lower" trades, anticipating a slow, steady selloff, though the Goldman Sachs trading desk warned against outright shorting, citing vulnerability to a short squeeze should tensions ease. In capital markets, the revival of Hong Kong IPO activity is encountering headwinds, raising the stakes for a pipeline of jumbo transactions, while China signaled a major step toward financial opening by raising the quota for institutional overseas investment by the largest margin since 2021.

Private credit markets are showing signs of strain, with distressed-debt funds viewing the sector downturn as the "greatest opportunity" since 2008, particularly as analysis suggests that large private credit funds have greater exposure to the ailing software industry than previously disclosed. This sector stress was visible when Oaktree Capital Management agreed to meet all redemption requests for a $7.7 billion retail-focused credit fund, contrasting with asset sales like Blue Owl’s that failed to signal market strength. Separately, BlackRock CEO Larry Fink received a 23% raise in 2025, largely attributed to the firm's aggressive expansion in private markets.

Regulatory Shifts and Sector Specifics

In India, the central bank’s intervention to defend the rupee is leading lenders to urge a rethink of new FX rules designed to shore up the currency, as the cost of defense mounts. Meanwhile, within corporate governance, Malaysian Prime Minister Anwar Ibrahim reportedly opposed the swift public release of a probe into his anti-graft chief’s shareholdings. In the U.S., political spending is ramping up ahead of the midterms, with a pro-AI group planning to spend $100 million to influence the debate on technology regulation, while a new group backed by a former administration official plans a similar $100 million push focused on Trump’s A.I. agenda. Finally, in a move to boost domestic producers, New Zealand confirmed plans to reintroduce S&P/NZX 20 Index Futures by late April, filling a recognized gap in its capital markets structure.