Public Markets 3 Days

Last updated: March 31, 2026, 5:30 AM ET

Geopolitical Shocks Drive Inflation & Policy Divergence

The escalating Iran conflict sent oil prices above $115 in early Asian trading, immediately testing central bank resolve across the globe, while simultaneously causing U.S. average gas prices to hit $4 a gallon. This energy shock is forcing inflationary pressure across Europe, with French inflation accelerating to its fastest pace since August 2024, prompting ECB member Muller to signal that borrowing costs will likely rise over coming quarters. Contrasting this tightening trend, Thailand’s central bank maintained a wait-and-see policy, arguing rate cuts would be ineffective against a Middle East-driven oil shock, though it left the door open to intervention. In Asia, the Reserve Bank of Australia could not confidently predict its cash rate path following its second hike this year, as surging oil prices fan domestic inflation concerns.

Market reaction to potential de-escalation was swift, as a Wall Street Journal report suggesting President Trump might end military strikes caused FTSE 100 futures and the pound to rise and sent European gas prices falling as traders reassessed the Strait of Hormuz risk. This rapid shift in sentiment created significant intraday volatility, leading to European rates markets setting a record for volatility, with algorithmic traders reportedly amplifying the swings. Meanwhile, the U.S. dollar wrapped up its best monthly performance since October 2024, benefiting from the flight to safety as energy markets fractured and economic forecasts were buffeted by the conflict.

Asian Markets React to Instability & Corporate Activity

Asian equity markets displayed differing resilience amid the turmoil, with Taiwanese stocks outperforming South Korean peers by the widest margin since 2009, signaling relative stability compared to neighbors grappling with external risks. The instability is also evident in fixed income, where the cost to insure top-rated Asian debt is set for its biggest monthly increase since 2023, reflecting mounting worries over the conflict’s economic fallout. In South Korea, the weakness in the won is concerning enough that the head of the nation's $1 trillion pension fund suggested action might be needed to stabilize the currency, even as the fund’s nominee stated that dollar liquidity remains ample. Separately, Japanese stocks declined as oil risk heightened over concerns that prolonged conflict would worsen the economic impact of steeper fuel costs, which have already driven Japan’s spot power prices to a three-year high.

Corporate activity in Asia saw several major players maneuvering ahead of potential listings or capital raises. Syngenta Group, the Chinese-owned agricultural giant, boosted profits as it focuses on higher-margin products ahead of a potential Hong Kong listing, while Victory Giant Technology also began gauging investor interest for a HK IPO. In the consumer sector, Chinese appliance maker Midea Group Co. is reportedly considering a $2 billion convertible bond sale, signaling a desire to secure funding via debt markets. Meanwhile, UK computer firm Raspberry Pi saw profits surge, reporting a 25% sales rise driven by strong demand in China and the US, partly due to the ongoing artificial intelligence boom.

Corporate Strategy and Global Supply Chain Disruptions

The conflict’s impact on global supply chains is forcing multinational corporations to adjust strategy, with Unilever pausing global hiring for three months to manage rapidly increasing shipping costs stemming from the war. The energy crisis is also directly affecting industrial output; a Saudi chemical plant, a joint venture between Saudi Aramco and Dow Chemical Co., halted production due to supply chain disruptions in the region. Furthermore, the shortage of helium, critical for semiconductors and rocket production, is threatening supply lines due to the conflict’s chokehold on the Strait of Hormuz. In response to rising fuel costs, fresh food distributors are adding surcharges for delivering perishables like salmon and fruit, even as good harvests offer a temporary cushion against food inflation for now.

Automakers and energy firms are also adapting to market shifts. Volvo Car is increasing its stake in Polestar to 19.9% by converting debt, while in the US, General Motors plans to boost heavy-duty truck production by running its Michigan plant six days a week starting in June. Energy companies are moving on overseas deals despite regional instability; Abu Dhabi’s 2Point Zero agreed to acquire a US gas infrastructure firm for $2.25 billion, representing continued Gulf investment abroad. Conversely, Japanese and Indonesian leaders pledged deeper energy security cooperation as both nations grapple with market instability triggered by the conflict.

US and European Market Dynamics

In the US, the prospect of lower oil prices following reports of a potential war end caused U.S. stock futures to gain in volatile trade, even as investors remained cautious. Bond markets reflected this tension, with some major bond managers arguing that markets are underestimating the risk of a sharp economic slowdown caused by the war. Meanwhile, the Nasdaq is speeding up index entry for large IPOs like SpaceX following a rule change intended to reduce the time for new behemoths to join its main index. On the regulatory front, White House review is pending for the SEC’s proposal on semiannual corporate disclosures, a step signaling the measure may soon be made public.

European markets are grappling with the financial fallout, with three former market darlings accounting for over half of the €481 billion wiped off European stocks this quarter, even as Sterling edged higher on improved risk sentiment following the news that Trump might exit the conflict. In fixed income, Eurozone government bond yields fell in volatile trading ahead of the Easter holiday. Defense and infrastructure spending remains high; Bosch’s German military supplier Rheinmetall is partnering with Boeing Australia to offer autonomous combat aircraft to the German armed forces. In corporate finance, Blackstone is reportedly planning a $500 million IPO in Mumbai for its AGS Health unit, while asset manager BlackRock is seeking a 600,000 sq ft headquarters in London, as demand for high-end office space persists.

Policy, Regulation, and Capital Flows

Global capital flows are reacting to geopolitical risk and changing regulatory environments. Foreign central banks have reduced their U.S. Treasury holdings held at the New York Fed to the lowest level seen since 2012 amid the Iran war fallout. In Asia, India’s central bank delayed stricter loan rules for proprietary traders to provide market relief amid volatility. Meanwhile, the South Korean government is considering taxing inheritance based on book value rather than market prices in an effort to combat share price suppression and shrink the persistent 'Korea discount'. In the private capital sector, the industry faces a "disappointment era" as returns are expected to fall short of investor expectations, though some specialized funds are still attracting capital, such as Oaktree-backed 17Capital raising $7.5 billion for its latest NAV loan fund.