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Middle East conflict sticks 2026 consensus trades into reverse
Investors are rethinking popular themes and trades of 2026 due to the escalating conflict in the Middle East. Global equities have plummeted, the dollar has risen and traders have reduced their bets on rate cuts by the Federal Reserve. Investors have been preparing for growth this year. "A stagflationary surprise was not part of the plan", said ING's head of global markets Chris Turner. Investors are cautious and still have more to unwind. Here are five popular topics that have been "upended" by the conflict in Middle East. 1/ DOLLAR SHORTS SQUEEZED According to data released by the U.S. regulator of markets, investors had made their biggest bearish bets on the dollar since at least 2021 just last month. The Federal Reserve of the United States is expected to cut rates, but this has not led many people to purchase too much US currency. The dollar's strength has increased since November last year, indicating a flight to safety. Ipek Ozkardeskaya is a senior analyst at Swissquote. She said that the U.S. Dollar emerged as the largest winner of the Middle East Conflict. The U.S. will be more resilient to shocks from energy. Jean-Francois Robin is the head of global analysis at Natixis. He says that the U.S. has become a net energy exporter and only imports 17% of what it needs. This is a record low for 40 years. 2/ REST WORLD EQUITIES SLUMP Global equity markets, which started?2026 with a consensus of "buying equities", have fallen sharply. The MSCI World ex US index dropped abruptly following the U.S.-Israeli strikes on Iran. However, the S&P 500 index remained stable as investors favored the U.S. because its economy is less dependent on energy imports. Lale Akoner is a global market strategist for eToro. She said that if inflation remains sticky due to energy, then "multiples and not earnings" are the weakest link. She said that earlier signs of leadership spreading beyond the United States had faded, as investors returned to U.S. market depth and liquidity. Swissquote's Ozkardeskaya?said that the shock could shift the flows towards energy-rich markets, and?weigh down on energy-dependent countries. This would potentially stop the rotation of the U.S. from Europe and Asia. Emerging Markets Rattled The currencies and stocks of emerging markets performed well at the start of the year. MSCI's index for emerging market currencies rose by 1.9% and EM stocks jumped over 15%. The two indexes fell by 7% and 1,5%, respectively, last week. This was despite the fact that some of the strongest performers in terms of performance year-to date such as South Korea’s Kospi had experienced sharp drops. Goldman Sachs told clients in a Wednesday note that the currencies with the worst performance this week had been amongst those with best performances between January and Februrary. De-risking is strongest in markets that are most vulnerable to Middle East and oil shocks such as Egypt and the United Arab Emirates, as well last year's top performers like Korea, Brazil, and South Africa. JPMorgan analysts moved EMEA Emerging Market FX from'marketweight to 'underweight on Tuesday. They added Poland's Zloty to the list of currencies they considered 'underweight.' Central and eastern Europe, according to JPMorgan, is especially vulnerable to energy prices. 4/ FED RATES CUTS IN DOUBT Rising energy prices have stoked inflation fears and caused traders to lower their expectations for interest rate cuts from the Fed. Before the start of this 'conflict', the markets expected that there would be a 50% chance for a rate reduction at the June meeting. This would have been the first one under the new chairman. This has been reduced to about 25%. Recent energy prices have prompted traders to'reduce expectations of interest rate cuts by the Bank of England. Goldman Sachs stated that "some of the biggest shifts in central bank pricing for 2026 G10 have come from economies which were priced to further ease this year." 5/ BANKS Investors have reassessed the economic impact of disruptions in the Strait of Hormuz. Higher energy costs have fueled fears of broader inflation pressures returning, which could lead to a slowdown in lending and a weakening of credit demand. Although higher interest rates usually support bank margins and can reduce borrowing, new inflation concerns can limit investment. Akoner, from eToro, said that the main risk to be aware of is the credit spreads.
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The price of oil has risen to its highest level since 2022, at $119 or more per barrel due to the war in Iran
The price of oil soared to $119 a barrel on Monday. This is the highest it has been since mid-2022. Some major producers reduced their supply and there were fears that shipping would be disrupted for a long time due to the U.S./Israeli war against Iran. Brent crude futures rose $12.77 or 14% to $105.46 per barrel?at 1126 GMT. U.S. West Texas Intermediate Crude Futures (WTI) were up $13.66 or 14% at $103.56. Brent hit $119.50 per barrel in a whirlwind session, its highest-ever price increase on a single date. WTI also reached $119.48. Brent is up 66%, and WTI by 77% from their last close on February 28, before the U.S. began its attacks. According to LSEG's data dating back to the 1980s, Monday's price is comparable to all-time prices of $147 a barrel for contracts signed in 2008. MARKET STRUCTURE INDICATES INTENSE SUPPLY SHORTAGES Brent front-month loading contracts are more expensive than contracts with delivery dates in six months. According to LSEG data dating back to 2004, the price of gold reached a record high of?almost $36 on Monday. This was a far cry from its previous peak of $23 in early March 2022, during the first weeks of the Russia/Ukraine War. This premium is indicative of a "market structure" known as backwardation. It shows traders are experiencing a severe shortage in supply. The Strait of Hormuz is almost closed, which means that only a fifth of the world's crude oil and natural gas is able to pass through. The?appointment? of Mojtaba Khamenei, to succeed Ali Khamenei in the role of Iran's supreme ruler?also boosted prices. This showed that the hardliners are still in control in Tehran after a week in the conflict with Israel and the U.S. Even if the war ends quickly, consumers and businesses could face weeks or even months of higher fuel costs as suppliers deal with damaged facilities and logistics, and increased risks in shipping. U.S. gas contracts have risen to their highest level since 2022, at $3.22 per gallon. This is at a moment when President Donald Trump told U.S. citizens that the impact of this increase on their cost-of-living would be minimal ahead of November's midterm elections. UBS analyst Giovanni Staunovo said that "alternatives, like tapping strategic oil reserves are limited but they are a small drop in the bucket compared to the magnitude of supply disruption if Strait remains 'closed for longer. Chuck Schumer, the Democratic leader of the U.S. Senate, has asked Trump to release strategic oil reserves. A French government source stated on Monday that he would also bring this up with the Group of Seven. SOURCES SAY SAUDI ARAMCO HAS STARTED CUTTING PRODUCTION. Saudi Aramco is reducing output at two oilfields. Analysts predicted last week that OPEC's heavyweights, including the United Arab Emirates, would have to reduce production as soon as their oil storage ran out. Sources claim that the production of Iraqi crude oil from its southern oilfields is down 70% and that storage capacity has reached maximum. Kuwait Petroleum Corporation (KPC) also cut oil production on Saturday, but did not specify how much it would reduce. Saudi Aramco has, in rare tenders, offered to divert more than 4,000,000 barrels of Saudi Crude via the Red Sea Port of Yanbu. This is to compensate for the closure of Hormuz. Qatar, a major LNG exporter in the gas market, had already halted production following attacks on key infrastructure. In the UAE's Fujairah Oil Industry Zone, a fire started due to falling debris. No injuries were reported. Fuel supply disruptions are exacerbated by refinery interruptions. Bahrain's BAPCO announced a force majeure after a recent attack against its refinery complex. Saudi Arabia shut down its largest oil refinery. (Additional reporting by Yuka Obayashi, Sudarshan Vadhan, Rae Wee and Tim Gardner; editing by Sam Holmes Jamie Freed, Muralikumar Aantharaman
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Ghana will introduce new gold royalties on Tuesday, despite opposition from regulators
The head of Ghana's mining regulator said that the country will move ahead with a new gold royalty system on Tuesday, which will?link state revenues to increasing bullion prices. This is despite the opposition from China, other Western governments, and mining executives. Last week, it was reported that the United States and China along with several other Western countries had made a rare effort to convince Ghana to stop the policy. This is part of an 'overall push by African governments for more value to be derived from the surging commodity price. The new royalty rate replaces the flat 5% rate that was previously charged by Africa's largest gold producer. According to the framework examined by, gold miners would pay 12% if gold reached $4,500 an ounce under a sliding-scale system. Gold is currently trading at over $5,000 per ounce. Royalties on lithium will be based on a sliding scale of 5-12%, based upon prices between $1500 and $3200 per metric tonne, while other minerals remain at a flat rate of 5%. A Regulator Says Policy Has Support Isaac Tandoh is the CEO of the Minerals Commission. He said that diplomatic missions raised concerns over the top 12% rate, but had not objected to the policy change. He said that the Ghanaian authorities were not opposed to the review. "They met with us," he stated over the weekend. He said that the missions wanted to see the 12% rate kick in when gold hits $5,000 per ounce. However, Ghanaian authorities refused this proposal. Ghana's proposed sliding-scale royalty regime has also been opposed by the CEOs of world's leading gold miners, who warn that it will choke off future investment. Kenneth Ashigbey, CEO of the Ghana Chamber?of?Mines, said on Sunday that it will "dry up" new projects and output. Tandoh claimed that the sliding scale achieved a balance between boosting state revenue and preserving industry margins. He dismissed concerns Ghana would become uncompetitive by arguing investors are more concerned about regulatory stability rather than marginal cost shifts.
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Aluminium reaches four-year highs due to Middle East shipping disruptions
Aluminum prices reached four-year-highs on Monday, as fears of a prolonged disruption in shipping due to the U.S./Israeli war against Iran fueled concerns over'supplies'. Benchmark aluminium prices were down 1.7% to $3,386 per metric ton by 1105 GMT, from $3,544 earlier. This is the highest price since March 2022, when the metal was used for transport, construction, and packaging, reaching a record of $4,073.50. The Strait of Hormuz, through which aluminium from the Middle East is transported to the U.S.A. and Europe, has been virtually closed due to conflict in the Middle East. Ed Meir, Marex analyst, said: "The Europeans will be particularly worried as the Gulf Aluminum Stoppage coincides with Mozal's going offline in this month. "Some producers want to reduce their stock from outside the region to meet their obligations. However, we think this will be difficult due to the high concentration of Russian metal (currently under sanctions) on the exchange and the low levels of inventory elsewhere. . " In December, South32 said its 560,000-metric-ton-per-year capacity Mozal smelter would be placed on care and maintenance from mid-March, after talks ?with utilities and Mozambique's government failed to yield a new power deal. Concerns about supply have turned the contango or discount for the cash aluminium contract three months forward into a premium. . The price of a ton rose to $47.34 on Friday. This is the highest level since February 2022. It was previously around $32 per ton. Prices for 'aluminum along the maturity curve up to 2036 are backwardated. The surge in oil prices has also slowed global growth, and weakened demand for industrial metals. Lead was down by 0.8% at $1,937. Tin fell 3.3% to $48.426. Nickel was down 0.6% at $17.360. (Reporting and editing by Pratima Deai. Mark Potter edited the article.
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MORNING BID AMERICAS - Oil's triple-digit troubles
By Mike Dolan March 9th - Mike Dolan is Editor-at-Large for Finance and Markets. Oil shock and stagflation are often used as scare tactics in the financial markets. Both are very much at play now with the energy markets in chaos as the Middle East war enters its second?week with no end in sight. Crude oil prices rose above $100 a barrel on Monday, their highest level since the Ukraine invasion in 2004. If triple-digit oil price increases are not a temporary phenomenon, then the U.S. economy and the global economy may be in real trouble. Central bankers could also face their worst nightmare - stagflation. Below, I'll go into more detail. Listen to the Morning Bid today for more information on the impact of the oil price surge. Oil's triple-digit trouble is intensifying. The war in Iran has triggered an energy crisis. Fuel prices in the United States have risen well over $3 per gallon and are expected to continue rising. Donald Trump said on Twitter overnight that the rising price of oil was "a small price to be paid" in order to win the war. However, many voters may question this. This latest spike in inflation is a concern for investors and central banks, especially after the surprisingly low U.S. jobs report on Friday. Although the data was distorted by the bad weather of February, there were still few positives and signs that labor markets have stagnated. The dark prospect of "stagflation" - a combination of slow growth and rising prices - is now looming. It is still unclear how the Fed will react to this. They will probably just continue to do nothing, which is likely to disappoint almost everyone. Renewed inflation concerns have shaken global bond markets and intensified last week's sell-off, sending yields up - particularly in Britain where two-year gilt rates are on course for their largest one-day increase since 2022. Meanwhile, the stock markets around the globe tumbled, with Japan's Nikkei falling over 5%, and South Korea's KOSPI, which was soaring, dropping nearly 6%. This is on top of the losses of 5,5% and 10% respectively for these indexes last week. U.S. Stock Futures are down by more than 1% ahead of the bell, and the greenback is up as investors seek safety in dollar cash. Gold, the usual safe-haven, failed to deliver once again, as the dollar strengthened and Treasury yields climbed. The markets will be watching to see if the countries start tapping their oil reserves in order to stop the bleeding. Reports on Monday suggested that G7 finance minsters would discuss an emergency release of reserves. Chuck Schumer, the U.S. Senate Democratic Leader, has called on President Trump, who so far has not supported the move, to release oil from U.S. Strategic Petroleum Reserve. The crisis is escalating and it remains to be seen how far or for how long this will help. Gulf states continue to reduce their output amid threats against shipping through the Strait of Hormuz. Meanwhile, Tehran appears to be doubling-down as it names hardliner Mojtaba Khamenei as Iran's next supreme leader. He is the son of Ali Khamenei. Chart of the day The spike in fuel prices following the U.S./Israeli war against Iran could be a headache for the Republican Party as it prepares to hold midterm elections in November. The Midwest and South have seen some of the highest increases, including swing states that voted for Donald Trump in 2024. Watch today's events * ?U.S. Bill auctions for 3-month and 6-month bills Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent the views of News. News is committed to the Trust Principles and integrity, independence and freedom from bias.
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TSX Futures fall as Middle East turmoil increases inflation concerns
Futures linked to Canada's major stock index fell on Monday, as rising oil prices were a result of escalating tensions between the Middle East and North Africa. This increased inflation fears among investors. As of 6:50 a.m., March futures for the?S&P/TSX Composite Index were?down 0.92%. ET. Wall Street futures also fell sharply after the Middle East conflict. Geopolitical tensions increased after Iran named Mojtaba Khamenei as its supreme leader. He is the son of Ali Khamenei. This move was seen as proof that Tehran's hardliners are still firmly in control, especially with the conflict between the United States and Israel entering its 10th day. The market was gripped by fears of prolonged disruptions in shipping and major producers cut their supplies. Oil prices rose to levels last seen in mid-2022. Crude prices were down from their day-highs, however, following reports that G7 Finance Ministers will discuss the possibility of releasing emergency reserves. Traders also reported that Saudi Aramco had offered over 4 million barrels in a rare tender. Gold prices also suffered from a stronger dollar. Canada's benchmark index of equity companies led by mining and energy giants has fallen from its record highs reached?last week and has lost almost 3.7% in the first three months of?March due to?worries about higher oil prices adding to inflation pressures. The monetary policy outlook will be influenced by the U.S. inflation readings, and Canadian job data due later this week. Brokerage J.P.Morgan has downgraded First Quantum Minerals from "overweight" to "underweight", and Lundin Mining Corp from "neutral" to "underweight". CLICK 'ON CODES' TO GET CANADIAN MARKETS UPDATES Market report for TSX. Canadian Dollar and Bond Report CAD/CA/ Global Stocks Poll for Canada EQUITYPOLL1, EPOLL/CA Canadian Markets Directory CANADA (Reporting and editing by Ditta Pujara in Bengaluru, with Rashika Singh reporting from Bengaluru)
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South Korea to invest in US nuclear power project
Kim Jung-kwan, South Korea's Industry Minister, said that Seoul was 'in talks' to invest in a nuclear project in the United States. This is part of Seoul’s pledge of investing $350 billion into U.S.-based projects. Seoul is scrambling to review its deals with Washington, after U.S. president Donald 'Trump' threatened to increase tariffs on goods imported to South?Korea by 25%. He blamed a delay of the Asian ally in implementing a trade agreement agreed last year. Kim responded to a question from a member of the parliamentary committee about Korea's potential investments in U.S. nucleopower plants by saying, "We are in serious discussions regarding nuclear power." The Minister did not elaborate further on the details of the discussions. The U.S. Government signed a partnership last year with Westinghouse to build nuclear reactors worth at least $80 billion. This is one of the most ambitious plans for atomic energy development in recent years. Sources told us last week that Japan and the United States are also working on including a nuclear project in the second round of deals under Japan's $550 billion investment package. (Reporting and Additional Reporting by Heekyong Yay; Editing by Jan Harvey and Aidan Lewis).
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The Middle East conflict and the rise in oil prices have prompted governments to take action.
Share markets fell on concerns that the escalating U.S. - Israeli war 'on Iran would squeeze energy supplies around the globe and hamstring industry. Here are some?actions governments are taking or plan to take in order to lessen the?impact on their economies of war. SOUTH KOREAN PLANS FUEL CAPITAL South Korean President Lee Jae Myung announced on Monday that the government would cap domestic fuel costs for the first time since nearly 30 years. He said that the country would also seek other sources of energy than those shipped through the Strait of Hormuz. A 100 trillion won ($67 billion), market stabilisation programme, should be expanded, if necessary. JAPAN TELLS SITE OF NATIONAL OIL RESOURCE TO?PREPARATE FOR RELEASE? The Japanese government told a site of a national oil storage reserve to prepare for the release of crude. Nagatsuma stated that details such as the release date are unclear. VIETNAM TO REMOVE FUELS IMPORT TARIFFS Vietnam plans to remove import tariffs for fuels in order to maintain supplies during disruptions. INDONESIA WILL INCREASE FUEL SUBSIDIES Indonesia's finance minister announced on Monday that the country will increase its allocation for fuel subsidies within its state budget. The budget for the country is 381.3 trillion rupiah (about $22.5 billion). This money will be used to provide energy subsidies, and compensate Pertamina as well as utility company PLN to maintain fuel and electricity prices at a reasonable level. Indonesia, which is the world's biggest palm oil producer, could revive plans to launch B50, a blend consisting of 50% palm-oil-based biodiesel with 50% conventional diesel. CHINA ASKS REFINERS TO SUBDUCE FUEL EXPORTS China asked refiners last week to stop signing new contracts for fuel exports and to try to cancel any?shipments that have already been committed. They said that the guidance did not apply to international jet fuel refuelling, bunkering bonded or supplies to Hong Kong and Macau. BANGLADESH CLOSES?UNIVERSITIES AND RATIONS FUEL Bangladesh is closing all?universities as of Monday to save electricity and fuel. Bangladesh, which depends on imported energy for 95%, set daily limits on fuel sale on Friday after panic-buying and stockpiling. (Compiled by Edwina gibbs, edited by Lincoln Feast and Shri Navaratnam).
Pakistan Cenbank maintains rate at 10% as oil prices cloud inflation outlook
Pakistan's Central Bank kept its 'key policy rate' at 10.5%, pausing the easing cycle due to a resurgence in global energy prices and regional tensions.
The State Bank of Pakistan's website announced that the Monetary Policy Committee had decided to maintain the policy rate at 10.5 percent. A detailed statement will be released shortly.
SBP cut the key rate cumulatively by 1,150 basis points from a record high of 22% in mid-2024.
The escalating tensions in the Middle East are causing?concerns over disruptions to shipping through the Strait of Hormuz. This is a major artery for oil supplies worldwide, driving energy prices up.
Pakistan imports the majority of its energy, so domestic inflation is sensitive to global fuel prices.
It raised the prices of diesel and petrol by about 20% on Friday. The higher prices were attributed to the conflict in Iran.
Jameel Ahmad, the Governor of the Central Bank, has previously stated that "the economy can grow between 3.75% and 4.5% in FY26 due to stronger domestic demand, earlier monetary easing, and inflation could temporarily exceed 5%-7% this year, before it eases.
Pakistan is part of an ongoing $7 billion IMF program. The Fund urges policymakers to keep monetary policies tight and data-dependent in order to anchor inflation expectations, and strengthen external buffers. Reporting by Ariba in Karachi, Editing by YPrajesh
(source: Reuters)