Public Markets 8-Hour Briefing
×Market Turmoil Amid Middle East Conflict
Global stocks were set for a rebound to end a turbulent week as investors grappled with escalating tensions in the Middle East. The S&P 500 and other major indices faced significant volatility, with emerging-market equities and currencies poised for their worst weekly decline since the pandemic's peak in 2020. Asian junk bonds underperformed as the Iran war exposed the region's heavy reliance on imported energy, while Chinese markets weathered the turmoil better than their Asian peers.
Oil prices retreated after a volatile week, though concerns about supply disruptions kept markets on edge. Brent crude could cross the $100 threshold if the Strait of Hormuz experiences several weeks of disruption, according to Goldman Sachs. The conflict has already caused a near-total halt in shipping through the vital waterway, with maritime traffic in the Strait of Hormuz grinding to a near-complete stop. Qatar offered to lease LNG tankers as its top export plant remained shut due to the ongoing war.
Regional Economic Impact
Turkey spent $12 billion to defend the lira from war-fueled turmoil, equal to roughly 15% of its foreign-currency reserves. Poland signaled it would avoid rate cuts until the Iran war ends, while developing Asian countries saw rate cut bets unravel as oil prices surged. The Philippines considered shorter work weeks and less air conditioning to save energy amid higher global fuel costs. Malaysia's economy and currency remained resilient despite pressure, with the second finance minister stating the country was within its safe economic forecasts.
India faced delays in its record $20 billion Jio IPO due to regulatory limbo, while Morgan Stanley downgraded its outlook on Indian stocks amid concerns about supply chain disruptions. Indian refiners moved quickly to buy Russian oil after the US relaxed restrictions, seeking to offset Middle East supply concerns. The Philippines' ICTSI continued searching for acquisitions and expansion opportunities in Africa, Latin America and Southeast Asia despite the Middle East conflict.
Corporate and Market Developments
Deutsche Lufthansa beat Q4 profit estimates with €39.6 billion in revenue but warned of 2026 risks from the Iran conflict. The airline's results were supported by fleet modernization and a 3% increase in passenger numbers last year. Cathay Pacific and Orient Overseas navigated Middle East volatility, with earnings calls from both companies highlighting investor concerns about regional operations.
Burlington Stores reported higher fiscal fourth-quarter profit as inflation concerns drove consumers to off-price retailers. IMI launched a £500 million buyback as 2025 earnings per share rose 8%. Comet Holding slashed its 2025 dividend by two-thirds despite sales growth, while SFS Group saw FY25 profit fall on restructuring despite margin improvement.
Defense and Infrastructure
Vincorion planned a Frankfurt listing as European defense spending rose, positioning itself to tap into momentum from increased military budgets. Top manganese firms in South Africa, the world's biggest producer, intended to bid for a new export terminal at the southeastern port of Ngqura. The conflict highlighted the vulnerability of Gulf energy assets, with infrastructure in the region playing a critical role in global power supply.
Technology and Innovation
China refrained from setting ambitious solar energy goals in its latest five-year plan, highlighting the sector's mounting challenges after years of explosive growth. Apple unveiled what analysts called a game-changing latest product, though details remained limited. Anthropic vowed legal action against a Pentagon sanction in an AI-related dispute, while crypto exchange OKX debuted a social platform linking posts to trades.
Financial Markets and Policy
The dollar showed strength offsetting war premiums as Treasuries fell, becoming one of the few major assets to rally during the week. Traditional safe havens including the yen, Swiss franc and gold offered no refuge to investors amid ongoing Middle East tensions. Gold rose but headed for a weekly loss as a firm dollar dulled its haven appeal.
Federal health officials attacked a rare-disease drug, alleging the company lied about its efficacy. The FDA faced criticism from lawmakers for recent delays and rejections of new drugs for rare diseases. US investors increasingly pushed for special funds to avoid Chinese tech, seeking so-called parallel funds that exclude certain assets.