Key recent developments
The conflict remains ongoing, with continued military activity and heightened geopolitical tensions across the region. Recent developments include:
- The U.S. and Israel have launched fresh waves of airstrikes across Iran, targeting multiple sites including oil depots and other strategic infrastructure
- Iran has continued missile and drone strikes targeting U.S. and allied assets across the region
- Iran has named Ayatollah Mojtaba Khamenei as successor to his father, Ayatollah Ali Khamenei
- The Strait of Hormuz remains at a standstill, with only Iran-linked vessels able to make the crucial crossing, prompting Gulf states to begin cutting oil production
Market movements (as of approximately 9:00 a.m. GMT, March 9)
We're observing significant movements across global markets:
- Oil: Brent crude has continued to increase rapidly to roughly US$110 per barrel, having been in the $66–$72 per barrel range before the conflict
- Equities: Moves have been less pronounced in U.S. equities, with the S&P 500 down around 2.0% month-to-date. European equities have fallen 5.6%, while Japan is down 9.8% month-to-date
- Currencies and bonds: The U.S. dollar is up 0.8% on safe-haven demand. Ten-year government bond yields have risen: U.K. +36bps, Canada +26bps, EUR and Australia +20bps, U.S. +18bps
- Gold: Gold spiked above US$5,400/oz before retreating below US$5,100 on a stronger USD and fading Fed-cut expectations
What this means for our clients
Predicting short-term market outcomes in an uncertain geopolitical environment is extremely challenging. We continue to observe developments closely and will provide updates as the situation evolves.
Importantly, we aren't currently recommending portfolio changes. As part of our monitoring process, we're evaluating a set of scenarios to frame potential market outcomes, which we summarize below.
Scenario 1 – Contained retaliation (base case)
In this scenario, tensions stabilize after a period of military conflict and volatility. Oil prices ease back as fears of a sustained supply disruption fade, and markets treat the conflict as a temporary geopolitical risk event rather than a structural economic shock. The broader macroeconomic impact in this case would likely be limited, though the episode reinforces the longer-term shift toward a more fragmented and geopolitically uncertain global environment.
Scenario 2 – Material disruption to the Strait of Hormuz (a material and growing risk)
This scenario involves a more sustained disruption to oil flows through the Strait of Hormuz or surrounding energy infrastructure. Oil prices could remain elevated for an extended period, in the US$90–110 range or higher, placing more sustained upward pressure on global inflation. Higher energy costs would weigh on household incomes and corporate margins, particularly in energy-intensive sectors, and could delay central bank rate cuts.
Scenario 3 – Further escalation (less likely)
While lower in probability, this more severe outcome would involve a broader regional escalation affecting key trade routes or energy infrastructure. In this case, oil prices and inflation could move well above current levels and trigger a stronger global risk-off move across markets, with equities falling more sharply and growth slowing more materially.
We remain committed to monitoring these developments and will continue to provide timely insights as the situation evolves.
