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German economy recovery will only be slightly slowed by the Iran war, according to economists
Three institutes said on Thursday that Germany's economy will only slow a little this year, as long as the energy prices pushed up by?the Iran War?reduce in the months to come. According to its December forecast, the Ifo Institute expects an economic growth of 0.8% in this year. This is based on the assumption that oil prices and gas will only remain high in the short-term. It expects German economic growth to accelerate to 1.2% in next year. The biggest economy in Europe expanded for the first time in three year in 2025, increasing by 0.2% as consumer confidence improved. This was aided by an increase in government spending. RESTORATION AFTER SHOCK Timo Wollmershaeuser is Ifo's head of forecasts. He said that despite the energy price shock the recovery in Germany will likely continue this year. He cited increased government spending on infrastructure and carbon neutrality as stimulants for demand. Ifo predicted that the forecast for 2026 would have been 1.0% higher without the U.S./Israeli war against Iran. The institute stated that if gas and oil prices continue to rise, Germany's GDP will only grow by 0.6% in 2026, as the inflation rate is expected to reach a peak of just below 3%. This effect would continue into 2027 with a growth rate of only 0.8%. Short-term rise in commodity prices IfW institute has lowered their December 2026 forecast by 0.2%, to 0.8%. They assume that commodity prices are likely to remain high for only a few months. IfW has raised its growth forecast for the next year from 1.3% to 1.4%. The RWI Institute revised its forecasts for this year down by 0.1 percentage points, to 0.9%. It also lowered its outlook for 2027 by?0.2 percentage points, to 1.2%. Torsten Schmidt, RWI's forecasting chief, said that the Iran war "demonstrates how vulnerable Germany remains due to its energy dependence." All three institutions expect inflation to rise by at least 2.5% in this year, before it eases again in 2027. (Reporting and editing by Thomas Seythal, Susan Fenton, and Miranda Murray)
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Norsk Hydro announces Qatalum Aluminium Smelter will stop curtailment and operate at 60%
Norsk Hydro announced on Thursday that its 'Qatalum' aluminium smelter, located in Qatar, would halt the curtailment begun last week. Production will be maintained at around 60% of capacity with reduced natural gas supplies. Qatalum - which has an annual smelting capability of 648,000 tons - began a controlled shut down on March 3, after it was informed that the gas supply would be cut off. QatarEnergy, a state-owned company, announced the day before that it would halt?LNG output after Iranian drones attacked its facilities. Hydro released a statement saying that Qatalum had decided to stop further curtailment after receiving confirmation from its?gas supplier. The benchmark three-month aluminum on the London Metal Exchange jumped as much as 2,6% on Thursday to $3,546.50 per ton, its highest level in nearly four years. Middle East smelters - which supply around 9% of the global aluminium - are unable to ship due to the closure of Strait of Hormuz. Norwegian company Hydro?owns 50% of the Qatalum Joint Venture alongside Qatar Aluminum Manufacturing Co.?which is owned by QatarEnergy. "The curtailment was carried out in an?safe and controlled manner. This, along with the continued operation at around 60%, improves the conditions for a possible restart. Hydro has not revealed the exact date of when the restart will begin. Hydro is working hard to minimize the effects of the shipping disruptions and curtailment. "The safety of Qatalum's employees is our highest priority", it said. Reporting by Tom Daly Editing and proofreading by Tomasz Janowowski
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BMW prepares for another year of tariffs and China struggles
BMW warns that it will not see any relief from the ongoing tariff costs in China and intense competition. The company warned on Thursday about a modest decline in its pre-tax earnings in 2026 and a stagnation of deliveries. BMW's rivals Volkswagen, Mercedes and Audi also reported a weaker 2025 due to trade barriers and falling China sales. They also made mistakes with electrification as the market demand for electric vehicles diverged in key markets. The outbreak of war in the Middle East has roiled nerves, fueling supply chain concerns and driving up fuel prices. It also threatens?demand, which is a major market for premium brands like BMW and Rolls-Royce. Risks ahead in an "unstable" world BMW CEO Oliver Zipse stated that the company was sticking to its strategy of overhauling its model line-up and cutting costs. However, he warned about future uncertainty. "Our world remains unstable and many risks will continue in the current year," he stated after the 'company reported a 6.7% drop in '2025 pre-tax profits. At 0916 GMT, shares of the most valuable automaker in Germany were trading at 1.3% less. Walter Mertl, CFO of Washington, hopes that new trade agreements will be reached between Washington and its trading partners, including the European Union (EU), Mexico, and Canada, in the second half. The company expects that higher tariffs in 2026 will result in a?1.25 percentage point blow to its core automotive margin, which is expected to range between 4 and 6%. This is a 5.3% increase from?2025, and a 6.3% increase from 2024. BMW's presence in the United States, where its largest plant is located in Spartanburg in South Carolina, has helped to cushion the impact of U.S. Tariffs, but the EU also imposes tariffs on the fully electric Mini made in China. In 2025, the group's earnings before tax fell to 10.2 billion euro ($11.78 billion). This is expected to fall further by 5% to 9.9% in 2026. Delivery levels will remain at the same level as 2025. This is despite a 12.5% drop in sales on China's key market. In 2026 "China could achieve last year's levels," said?Mertl. The company sees potential for growth in the U.S., Europe and Asia. It is also ramping up its redesigned 'Neue Klassen' range of cars, with 40 planned launches this year and next.
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Rosatom, a Russian company, says it will remain in Iran despite the war
Alexei Likhachev, the head of Rosatom's nuclear division, said that the company will remain in Iran despite the conflict in the Middle East. It is also committed to the agreement to build two more units at the Bushehr nuclear power plant. After the United States and Israel attacked Iran on February 28, Rosatom evacuated its staff, and suspended construction on the new units. Likhachev stated that around 450 Rosatom employees remain on the site after 150 returned via Armenia to Russia this week. "The construction and completion of the?second and?third units remain among the priorities for the?corporation. This is not the right time to go. "What is happening in the Middle East represents only a small part of a larger global mosaic", Likhachev told Rosatom. Likhachev stated on Monday that the situation around Bushehr was still tense, but there were no strikes at the Bushehr plant or construction site. The agreement allows for up to eight units of nuclear power, including four at Bushehr. Iran announced last autumn that it had signed a $25 billion deal with Rosatom for the construction of four nuclear power plants with a?capacity of 5 gigawatts?at a different site in the country's south-east. Both parties signed a memo on the development of small nuclear power plants within Iran. (Reporting by Anastasia Lyrchikova. Mark Trevelyan edited the story.
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Sources: China extends iron ore export ban to BHP's new product
China has increased its ban on BHP iron ore a second time in two weeks. This is a result of a contract dispute that's been ongoing for months with the world's third-largest supplier. Three sources familiar with the matter said that China Mineral Resources Group (CMRG), the state-run buyer of iron ore, told domestic steel mills on Thursday they were prohibited from taking Newman fines – a popular BHP type of?iron stored in ports – as of next week. According to two sources, however, customers will still be able to receive their cargos in 'the next five days'. Due to the sensitive nature of the issue, all sources asked for anonymity. Beijing has gradually tightened restrictions on local steel mills, traders and steelmakers buying BHP ore over the last six months as it negotiates the terms of the 2026 contract with steelmakers. China banned the purchase of Jimblebar fins, another form of iron ore in September. This was followed by the Jinbao product in November. Last week, traders were instructed to purchase fewer Newman fines and lumps?and Macfines. However, the directive also allowed the purchase of those grades of iron ore that are already in port. The ban this week restricts the allowed range of products to Newman lumps, Mac fines, and other stocks that are already stored in ports. In the afternoon of Thursday, benchmark April iron ore price on the 'Singapore Exchange' rose by more than 3%. BHP declined comment, and CMRG didn't immediately respond to a comment request. (Reporting and editing by Clarence Fernandez, Pooja Dasai).
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Ribera, the EU's antitrust chief, is open to granting state aid to heavy energy consumers in crisis
Teresa Ribera, Europe's Competition Chief said on Thursday that European Union governments could 'allow state aid for energy-intensive companies to offset the steep rise in electricity prices due to the increase in oil and gas prices caused by the Iran War. Ribera said at a conference organized by the German antitrust agency Bundeskartellamt that "for the moment we have untapped State Aid possibilities" which member states could still use to provide relief to the electricity prices of energy intensive?users. She said the European Commission is also prepared to provide support measures and longer-term plans for businesses to counter the impact caused by the war. This was based on the previous?measures taken to combat the COVID epidemic and the war in Ukraine. These programs allowed the government to give billions of Euros to companies. Ribera stated that "we are not yet there but in the event of a crisis, we must draw on our experience from previous crises." Ribera said that she is now evaluating the U.S. technology company's new attitude. She had earlier threatened to?temporarily block Meta Platforms? from excluding rival AI Chatbots? on its messaging service WhatsApp. "Last Week, Meta announced that it would reverse the decision to exclude AI chatbots of third parties from WhatsApp. However, it will start charging a charge. She said that we are?now evaluating if this change in policy has any impact on the need to act urgently by the?Commission." The rivals said that the fees were?too complex and too expensive and urged the EU enforcer of antitrust to issue a interim measure against Meta. (Reporting and editing by Louise Heavens, Foo Yunchee)
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IEA: Middle East conflict will cause the largest ever oil supply disruption.
The International Energy Agency announced on Thursday that the war in the Middle East has caused the largest oil supply disruption ever. This comes a day after the agency agreed to release record volumes from its strategic stockpiles in order to counter shortages and spikes in prices. The IEA stated in its latest monthly report that global supply is expected to fall by 8 million barrels a day in March due to the blockage of the Strait of Hormuz - a narrow 'channel' along the Iranian coastline - since the U.S. began an airstrike campaign against Iran on February 28, Middle East : Gulf countries, including Iraq, Qatar and Kuwait, as well as the United Arab Emirates, have cut their total oil production 'by at least ten million bpd – a volume equivalent to almost 10% world demand – due to the conflict. This agency said that if shipping flow does not resume quickly, the losses will continue to rise. The agency stated that it could take up to a month to restore production to pre-crisis levels, depending on how complex the field is and when workers, equipment, and resources return to the area. The IEA (which advises industrialised nations) agreed on Wednesday to release a record 400 mln barrels of crude oil from strategic stocks held by member countries to combat a rise in global crude prices after the start of the U.S. - Israeli war against Iran. Oil prices increased on Thursday as Iran intensified its attacks on oil and transportation?facilities in the Middle East. This sparked fears of a prolonged conflict, and the disruption of oil flow through the Strait of Hormuz. Brent crude, which reached $119.50 per barrel on Monday - its highest level since mid-2022 - was up over 6% at just under $98 a barge on Thursday. (Reporting and editing by Alex Lawler)
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After Gulf Shipping Attacks, oil prices and shares plummet
Global shares fell Thursday after attacks on oil tankers shattered prospects of an imminent de-escalation of the Middle East conflict. Oil prices rose above $100 per barrel, causing inflation fears to rise. The response shows 'how quickly bets were withdrawn on a quick end to the war. The contradictory?messages of U.S. president Donald Trump has left traders fearful that they will be caught off guard, causing them to stay away from the markets or seek refuge in safe-havens. Investors were not satisfied with the International Energy Agency’s announcement on Wednesday that it would release 400,000,000 barrels of crude oil from its reserve, which was the largest move in its entire history. Brent crude futures rose as high as 10.4%, to $101.59 per barrel, before trimming their gains. There was still doubt about whether the release of reserves would be sufficient to cushion the blow from the Middle East?supply shock. Crude futures for the United States were last traded at $91.82, up 5.2%. "Even though the reserves may be large, it is not known how quickly they will reach markets. Joel Hancock is an energy analyst with Natixis CIB. He said that a market 'balanced' via strategic stock releases would be less efficient logistically. The STOXX 600 index, which is the pan-European benchmark for equity, fell 0.5%. Futures that track the S&P?500 in the U.S. and the tech-heavy Nasdaq100 were both down by 0.5%. The MSCI All-World Index fell by 0.3%. The odds on Polymarket, a prediction market platform, indicated a 26% probability of a ceasefire by March 31, down from 45% earlier in the week. Attacks on Oil Shipments Continue Iraqi officials said that two fuel tanks in Iraqi waters had been struck by Iranian boats laden with explosives, and an Iraqi official told state media on Thursday that the oil ports there "have completely ceased operations." Bloomberg News reported Oman had evacuated its main oil export terminal, Mina Al Fahal, as a precautionary move. Rodrigo Catril is a senior FX Strategist at NAB. He said, "The market continues to be very concerned about what's happening in the Strait of Hormuz and the information we have received over the past 24 hours does not make for a good read." It's a way of reinforcing the idea that we should worry about it and that the oil prices will go up from here rather than come down. Iran had increased attacks against merchant ships in Strait of Hormuz. The number of ships that have been struck in this region since the fighting began has now reached at least 16. Tehran warned the world that oil could reach $200 per barrel. Inflation Risks The U.S. Consumer Price Index rose 0.3% last month, which was in line with expectations and above the 0.2% rise in January. However, the report was not considered particularly relevant, given that inflation has been fueled by the Iran War. Globally, bond yields rose as the rising inflation risk outweighed any concerns about safe havens. The yields on 10-year Treasury Notes?rose to 4.2257%, up 2 basis points from the previous day. Fed funds futures continued to fall as investors feared that higher inflation could make it difficult for the Federal Reserve policy to be eased. Markets bet on only one rate cut by the Fed in 2018. The markets have bet that the European Central Bank will raise rates in June, if not earlier, due to the threat of energy-driven inflation. Investors on edge sought out the dollar's liquidity, while shunning currencies of countries which are net energy consumers. This includes Japan and most of Europe. The euro fell 0.2% to $1.1548. The dollar held steady at 158.88 Japanese yen after a slight retreat from its highest level since January, when the U.S. Fed's rate checks spooked the yen bears. Reporting by Stella Qiu, Niket Nishant and Edwina Gibbs; Editing by Shri Navaratnam, Susan Fenton and Edwina gibbs
The ROI-Hedging strategy has changed. Portfolios need a new playbook: Taosha Wang
Hedging portfolios has been based on the same rules since decades. However, as technology, geopolitics, and trading have changed rapidly, it is time to update the rules.
Old playbooks assumed stable relationships. Risk-off meant that bonds rallied. "Safe havens" cushioned withdrawals. Diversification could be left to autopilot.
This assumption has proven to be unreliable. Portfolios that are resilient will be required as a result of rising leverage, shifting global alliances and technological disruption. To capture long-term capital preservation and growth, a more deliberate approach is needed.
High-grade bonds are one of the most popular hedges.
U.S. government debt and investment grade credit are no longer considered "low-risk". Although they are low-volatility under normal conditions, their hedging power is often compromised during inflationary, liquidity, or fiscal shocks. This was demonstrated in 2022.
Multiple risks are present in the current environment, which could have a disproportionate impact on bonds. The United States' ongoing fiscal expansion raises concerns about debt sustainability, and threats to the independence of the central bank and growing tensions between America and its trading partners may impact foreign appetite for U.S. government debt.
In the meantime, credit indices have become more concentrated, as large tech companies issue bonds to fund massive capital expenditures in artificial intelligence.
This does not mean that bonds are unattractive. It means that investors need to be realistic and precise when it comes to the risks that they take on and how these risks can reduce bonds' traditional hedging abilities, especially during times of inflation and fiscal narratives.
SAFE, but not Stable
The term "safe haven" is no longer synonymous with "stable."
Gold is an excellent example. Gold's scarcity and long-standing role of a wealth store remain true, but its biggest buyers continue to be central banks that are not price sensitive. These official buyers have increased their purchases steadily since the Russia-Ukraine War in 2022.
According to the CBOE Gold Volatility Index, however, gold's recent volatility rose above 40. This?indicates that gold is at a higher level than most major equity indexes. This is largely due to gold's 200%+ rally since 2022, which has attracted a lot of speculative attention.
Gold is a familiar metal and the trading of it has become easier, attracting marginal buyers that are more price sensitive. Gold jewelry has been used as a store for wealth in India and Chinese households use bullion to diversify their currency exposure.
The significant increase in gold held by exchange-traded fund since 2024 is proof of this. Gold is more vulnerable to violent'momentum' swings. For example, the intraday 14% selloff of January 30th was the worst since 1980s. This was followed by the best gold performance in a single day since 2008.
From DIRECTIONAL to STATISTICAL Hedges
In the event that traditional safe havens are no longer available, it is not possible to rely on broad-based hedges. Statistical hedges become more important.
Statistical hedges are assets that have a low or negative correlation with a portfolio’s main risks. This reduces volatility without sacrificing returns. Assets that serve as statistical hedges may seem risky when viewed in isolation but are not so when viewed within a larger portfolio.
Chinese stocks, for example, have increasingly served as a hedge against U.S. equity risks. Two markets performed very differently during the "DeepSeek Moment" of early 2025 when an open-source, cost-efficient Chinese AI model forced investors reassess U.S. technology dominance and valuation margins.
Three forces will benefit Chinese stocks over the next year: a reevaluation its tech sector, stabilizing macro-conditions and renewed support for the private sectors.
MSCI China returned 28% in 2025 compared to 16% in the S&P 500. This was the best performance in absolute and relative terms for the former in many years.
Allocate to China, but do not consider it a bet on America. In a world where the unchallenged U.S. exceptionalism is fading, it's about hedging your portfolio?risk.
Focus on Regime Shifts
Statistical hedges are not classic hedges. They require constant reevaluation as macro regimes change. The correlations are volatile and shock-dependent. What hedges an inflation scare may fail to do so in a growth panic.
In 2022, for example, energy provided a good hedge because the main risks were inflation and disruption of supply. If we enter a period of excess supply in certain markets for energy, this hedging ability might not hold.
In an AI-driven cycle, which is unpredictable and susceptible to sudden changes, it is important to use a "macro régime lens".
The hundreds of billions in AI capex that we are currently?seeing seem to be boosting the global GDP, pushing forward demand for resources and increasing leverage. This trend could initially be inflationary but this may change as productivity increases are realized. AI-related job loss could also push central banks into easing even if resource constraints continue, increasing the risk of disorderly inflation.
Here, copper could be a valuable asset. Copper, which is usually viewed as a growth indicator rather than an investment hedge, faces a structurally increasing demand due to AI and renewable energy investments, posing a risk of severe and extended supply shortages. Copper could therefore?benefit not only from the AI boom, but also as a hedge to the risks of resource scarcity or disruptive inflation.
The new playbook for hedging is based on the principle that protection should be designed and not assumed. It is important to break the habit of labeling assets as "risk on" or "risk off." A hedge can be both volatile, headline-grabbing and profitable.
Investors must identify risks, choose the best hedges to mitigate them and monitor the risk landscape constantly. Diversification has become a discipline in a world of volatile correlations and macro-regime shifts. The views expressed are those of this author. Taosha is a portfolio director and the creator of Fidelity's "Thematically Thinking Newsletter". This article is intended for informational purposes and should not be taken as investment advice. This column is interesting to you? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn, X and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
(source: Reuters)