Weekly market commentary

Market review

Over the past week, markets have remained volatile as the conflict in Iran continues. Despite some sharp day‑to‑day movements, overall market levels are only slightly lower than they were at the end of last week.

Uncertainty increased when Iran announced a new Supreme Leader, Mojtaba Khamenei, following the death of his father, Ali Khamenei, in recent airstrikes. Investors reacted nervously, concerned about political stability and the potential for continued conflict. Although President Trump said the war was “nearly over”, tensions remain high, and Iran has confirmed that the Strait of Hormuz will stay closed. As this route is crucial for global oil shipments, its closure has kept energy markets on edge.

To ease supply concerns, President Trump temporarily relaxed sanctions on Russian oil already in transit, and the International Energy Agency agreed to release 400 million barrels from global reserves. While these steps provided some reassurance, worries about inflation and geopolitics remain.

Rising oil prices have pushed inflation expectations higher, meaning government bonds haven’t offered their usual protection for multi‑asset investors. In contrast, the US dollar has strengthened as investors seek safe‑haven assets.

Economic data has also been mixed. In the UK, Gross Domestic Product (GDP) showed no growth in January, signalling continued economic pressure. GDP is the main measure of the total goods and services the UK produces, and a key indicator of overall economic activity. In the US, employment data suggests a labour market that is cooling gradually rather than weakening sharply.

Looking ahead, central banks face a challenging backdrop of higher inflation and slower growth. Attention now turns to next week’s policy meetings from the Federal Reserve, European Central Bank and Bank of Japan, as investors look for guidance on interest rates and inflation risks.

Outlook

Markets remain sensitive to new economic data, with volatility picking up around key announcements and rising geopolitical uncertainty. Inflation and growth are moving at different speeds across regions, leading central banks to take increasingly different policy paths. At the same time, higher government spending and shifts in financial conditions are adding further challenges, meaning asset performance may vary more widely in the months ahead – something that’s normal during periods of change.

Movers table