Quarterly Investment Outlook - April 2026
Military activity in the Middle East over the past seven weeks has driven a sharp but familiar bout of market volatility, centred on higher energy prices and renewed stagflation concerns. Disruption to commodity transit through the Strait of Hormuz has become a key focus, affecting around 20% of global oil consumption and 25–30% of Liquified Natural Gas. Recent market moves have been dominated by energy markets, with oil and gas prices rising sharply and the impact spreading into wider commodity inputs such as fertilisers, reflecting concentrated Gulf production.
This has fed quickly into other asset classes: bond yields have risen across the US, UK and Europe as markets delay expectations for rate cuts amid higher inflation risk. Equity markets have also corrected, though unevenly. Energy‑import‑dependent regions, notably Europe and Asia, have underperformed, with Asia particularly exposed due to its reliance on supplies transiting the Strait of Hormuz. By contrast, US equities have proved more resilient, supported by domestic energy production, a services‑led economy and stronger earnings momentum, whilst the dollar has strengthened as a safe haven.
In this quarter’s letter, we examine the economic effects of the latest Middle East conflict and explain why our core message remains unchanged.
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