Public Markets 8-Hour Briefing
×Market Volatility & Geopolitical Impact
US stocks fluctuated as traders debated the market impact of escalating Middle East conflict, with the S&P 500 bouncing back from earlier losses after oil prices spiked. The escalating Iran war sent most safe-haven assets higher Monday as investors braced for worst-case scenarios, with benchmark diesel futures rising 23% and oil surging the most in four years. Brent crude jumped as war disrupted shipments, while oil supertanker rates soared to record highs on Middle East conflict, with the cost of hauling crude from the Middle East to China hitting unprecedented levels.
Credit Markets & Private Equity
Ares Management closed an $850 million continuation fund for Convergint, allowing an asset bought in 2018 to be rolled into a new vehicle. Ares also emerged as the primary buyer for a $2.2 billion Arcmont secondary sale in the market for secondhand stakes. Michael Saylor's Strategy Inc. bought more than $200 million worth of Bitcoin, turning to common stock to finance acquisitions despite previous commitments to use preferred shares. BlackRock's GIP and EQT made a $33 billion bet on electricity demand by purchasing power plant operator AES, which has struggled on the stock market.
Banking & Financial Services
JPMorgan Chase CEO Jamie Dimon warned that inflation could become a "skunk at the party" for the US economy during the bank's annual leveraged finance conference. Dimon said he's not surprised by the sanguine market reaction to strikes in Iran and expects a pickup in M&A activity this year. JPMorgan dialed back bullish emerging markets calls on Iran war, reducing the scale of overweight recommendations on emerging market currencies and local bonds. Allianz Global Investors is considering purchasing dollars after months of betting against the US currency as Middle East conflict revives its haven status.
Technology & AI
Nvidia is investing $2 billion in both Lumentum and Coherent as part of agreements to accelerate advanced optics technologies for AI infrastructure. SoftBank's PayPay delayed the start of formal marketing for its US IPO. Vincorion, a German defense technology firm, is set to begin formally marketing its Frankfurt IPO despite equity markets being roiled by Middle East conflict. Generative AI is set to transform how credit traders do their jobs, as the technology handles unstructured data produced by the asset class, according to JPMorgan.
Commodities & Energy
US natural gas futures rose alongside global prices that surged in response to knock-on effects from the Iran war, including Qatar's shuttering of production at the world's largest liquefied natural gas facility. US liquefied natural gas exporters stand to gain from supply disruptions amid the war with Iran, though benefits may be tempered by American producers operating near maximum capacity. The conflict threatens to disrupt a major fertilizer production and shipping hub, raising risks of higher crop costs and food inflation. Canada's economic growth outlook would be lifted by a sustained rise in oil prices, according to Bank of Nova Scotia.
Emerging Markets & Global Trade
Middle Eastern investors continued their global acquisition spree Monday, unveiling big-ticket transactions while brushing off concerns that Iran conflict could dent regional dealmaking. Colombia's government is planning reciprocal tariffs of 50% on imports from Ecuador, intensifying an economically damaging spat between ideological foes. Venezuela sharply increased oil exports in February, sending roughly twice as many barrels abroad compared with January when the Trump administration first exerted control. South Africa's Treasury says stronger public finances provide a sizable cushion to absorb external shocks like Iran war fallout.
Currency & Safe Havens
Investors turned to gold, not bonds, as a haven from war in Iran, with gold and the US dollar jumping while government bonds fell amid fears of an inflation shock. Australia's biggest pension funds have had to revisit their currency playbook as a sustained rally in the local dollar threatens to erode portfolio returns in the A$4.5 trillion retirement savings system. Janet Yellen said depending on how long the Iran conflict affects oil markets, there will be both a hit to US economic growth and an increase in inflationary pressures.