US and Israel attack Iran

Geopolitics has re‑emerged as a dominant market driver

following coordinated US–Israeli strikes on Iran and the death of Ayatollah Khamenei. The resulting leadership uncertainty and Iran’s retaliation have lifted regional risk premia, with markets focused on potential disruption around the Strait of Hormuz, where roughly one‑fifth of global crude flows pass.

Energy markets are the key transmission channel,

with early signs of shipping hesitation already embedding a geopolitical premium into crude. Historically, oil spikes retrace unless physical supply is impaired; OPEC+ spare capacity provides a buffer, making the durability of any price move more important than the initial jump.

Inflation dynamics face an unwelcome complication

as firmer US PPI data and the prospect of higher oil prices challenge confidence in near‑term policy easing. The interaction between crude and bond yields will be central: anchored yields would signal faith in the disinflation trend, while a sustained rise would imply a reassessment of the rate path.

NVIDIA’s strong earnings highlighted a shift in AI‑related market psychology,

with investors now scrutinising capital intensity, margin durability and cash‑flow conversion rather than rewarding headline growth. The muted share reaction reflects stretched expectations and helps explain the S&P 500’s difficulty in extending gains despite broadly resilient earnings.

February performance shows broadening leadership across regions,

with Japan and the FTSE 100 outperforming on corporate reform momentum, currency dynamics and commodity exposure. Asia ex‑Japan and EMs posted solid gains, while China lagged. Markets tied to real assets and cyclicals outperformed long‑duration growth, signalling rotation rather than deterioration in global risk appetite.