Written by Dominic Williams
Global equity markets gave back some recent gains, with the MSCI All Country World Index falling ‑3.1% as investors absorbed a potent combination of geopolitical shock and a weaker‑than‑expected US labour market report. The backdrop was shaped by developments over the preceding weekend, when the United States and Israel launched joint military strikes on Iran, killing Supreme Leader Ali Khamenei and triggering a rapid escalation of regional conflict.
Oil markets saw the most immediate and dramatic reaction. Brent crude surged past $100 per barrel over the weekend and spiked sharply to over $120 as markets reopened on Monday morning, 9 March, before retracing below $110 as markets digested further reports of damage to energy infrastructure across the Middle East. Notably, longer‑dated oil prices have barely moved, suggesting that markets see this surge as a short‑term shock rather than something likely to persist, despite the escalation raising the risk of a prolonged disruption to the Strait of Hormuz, the world’s most critical oil chokepoint, through which roughly one‑fifth of global oil supply normally flows. Commercial tanker traffic has all but halted, with insurers withdrawing cover and shipping companies deeming the security risk untenable. The resulting collapse in maritime flows has driven an unprecedented tightening in energy markets.
Equity markets initially showed some resilience at the beginning of the week, with most major markets ending Monday broadly flat, as investors drew comfort from the historical pattern of markets shrugging off geopolitical shocks relatively quickly. However, sentiment deteriorated through the rest of the week as concerns mounted over the economic impact of sustained energy price inflation. The S&P 500 ultimately fell -1.4% over the week, which was relatively resilient compared to other major markets, reflecting the United States’ status as a net energy exporter, which insulates it to a degree from the inflationary consequences of higher oil prices.
Asian markets bore the sharpest losses. MSCI Korea fell -12.9% over the week, its worst performance in many years, but this follows incredible gains this year, reflecting South Korea’s acute vulnerability as a major energy importer with a market heavily concentrated in energy-intensive industries. MSCI Taiwan declined -6.2% and MSCI Japan -5.9%, as the region’s dependence on Middle Eastern energy supplies weighed heavily on investor sentiment. Emerging markets as a whole fell -6.3%, with the breadth of losses masking even more severe moves in individual markets. The FTSE All Share was also notably weak, falling -5.6%, despite the relatively higher energy weighting of the index.
The week’s concerns were compounded on Friday by a markedly weak US labour market report. Non-farm payrolls, a key measure of US job creation, fell by 92,000 in February, well below the consensus expectation of around 59,000 growth and a sharp reversal from January’s downwardly revised 126,000 gain. The unemployment rate ticked up to 4.4%, and prior months were revised downward, with December and January combined showing 69,000 fewer jobs than previously reported. Although some of the weaknesses reflected temporary distortions from healthcare strikes, the broader picture remains one of a labour market that has generated very little net employment growth over the past year. Wage growth surprised slightly on the upside, rising 0.4% month‑on‑month and 3.8% year‑on‑year, adding to the uncomfortable mix of softening employment and sticky inflation that complicates the Federal Reserve’s task in setting interest rates going forward.
The week also highlighted the role of real assets as effective diversifiers, where the Bloomberg Commodity Index rose +8.1% in Sterling‑hedged terms, sharply contrasting with the broad declines across equity markets.
The week underscored the value of maintaining genuine diversification within portfolios. With equity markets facing widespread declines, the strength in commodities provided a valuable offset during a period marked by geopolitical strain and renewed inflation uncertainty. As recent events have shown, market drivers can shift abruptly, and a resilient portfolio depends on exposures that do not move in lockstep when volatility intensifies.
All performance figures are stated in Sterling terms, unless otherwise specified.
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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 9th March 2026
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