Global stocks are mixed this morning in watchful trading, as signs grow that the conflict in Iran could last longer and begin to weigh more heavily on economic growth. Canadian and U.S. equities futures are higher following a sharp selloff last week that pushed both the Nasdaq and Dow into correction territory, down more than -10% from recent highs. In contrast, Asian markets closed lower overnight, with Japan’s Nikkei down -2.8% and South Korea’s Kospi off -3%, reflecting continued regional sensitivity to energy prices and geopolitical risk. European equities are higher in early trading, pointing to some stabilization in sentiment. Over the weekend, hopes for a near-term ceasefire faded as the U.S. increased its military presence in the Middle East and the conflict showed signs of broadening, with Iran facing attacks linked from Yemen. The Houthis had largely remained on the sidelines until now, and their involvement introduces an additional layer of regional risk.
Pakistan plays peacemaker. There are efforts to de-escalate the U.S.–Iran war, with Pakistan offering to mediate talks this week. Regional powers including Egypt, Saudi Arabia, and Turkey are also pushing for direct dialogue, though no formal negotiations have been confirmed. The situation continues to disrupt global energy flows, with the Strait of Hormuz still constrained, contributing to oil prices above $100 and rising inflation concerns. Attacks on infrastructure, including an aluminum smelter in Bahrain, are beginning to ripple through industrial supply chains. Markets now seem to be caught between optimism and fear of a prolonged conflict, with volatility driven by shifting headlines, geopolitical uncertainty, and the risk that supply shocks extend beyond oil into metals, shipping routes, and other areas of global trade.
German inflation rose to 2.8% in March, its highest level in over a year, driven by rising energy costs linked to the ongoing Iran war, reinforcing expectations that the ECB may need to raise interest rates. The increase, up from 2% in February, was largely due to higher heating oil and fuel prices, with similar inflation pressures emerging across Europe. Markets are now pricing in a potential rate hike as early as April, with up to three increases expected this year, even as ECB officials signal a cautious but ready stance. Surveys indicate businesses and consumers are expecting higher inflation, raising concerns about entrenched price pressures. Policymakers warn that a prolonged conflict could risk stagflation, though they note the euro zone is better positioned than during the post-Ukraine energy shock.
Few places to hide. Global markets are showing signs of stress as the Iran war enters its fifth week, with investors facing a rare environment where equities, bonds, and traditional hedges all under pressure. The S&P 500 is down nearly -9% from its peak, while the Nasdaq has slipped into correction territory, signalling a broader pullback from risk assets. Energy remains the main driver of uncertainty, with crude prices posting record monthly gains and some scenarios pointing to further increases if the Strait of Hormuz remains closed. This has added to inflation pressures and pushed central bank expectations toward fewer cuts, and even some hikes in a few cases. At the same time, traditional safe havens have been less effective with bonds selling off as yields rise. With credit spreads widening, consumer sentiment weakening, and capital rotating toward cash and the U.S. dollar, investors appear more interested in capital preservation at the moment.
Not so fast. Russia initially looked set to benefit from the Iran war as oil prices rallied and its Urals crude narrowed the gap with global benchmarks, offering a potential lifeline to an economy strained by falling energy revenues and war costs. However, that is being undermined by Ukrainian drone strikes on export infrastructure which has knocked out roughly 40–45% of seaborne crude capacity at major ports, forcing disruptions that could offset higher prices. The attacks are also hitting refineries and triggering domestic fuel concerns, prompting Moscow to consider gasoline export bans to stabilize internal supply. This is unfolding against a fragile backdrop for Russia’s economy, where oil and gas revenues had already declined, inflation remains high, and risks of financial stress including the banking system, are rising. While higher global oil prices would typically provide support, supply disruptions, infrastructure damage, and domestic constraints are limiting Russia’s ability to capitalize, leaving its outlook vulnerable.
Depends who you ask. Economists expect the Iran war-driven rise in energy prices to push U.S. inflation higher while slowing growth. The PCE price index is expected to rise 3.1% this year (up from 2.6%), GDP growth trimmed to 2.3%, and monthly job gains downgraded alongside weaker consumer spending. Recession odds have climbed to 30%, and Fed rate cuts are pushed out to later in the year, reflecting a stagflationary backdrop where higher fuel, and potentially food costs weigh on demand even if the conflict eventually de-escalates. Executives on the other hand appear a little more optimistic with a recent survey of nearly 500 CFOs finding the majority see recession probabilities declining. Many see hiring expected to continue, although that is mainly through replacement rather than expansion, reflecting a steady but not strong outlook. The survey suggests that even as uncertainty around the Iran war and inflation continue, and companies grapple with rising costs, it’s not all doom and gloom.
A strong opening statement from the Jays, even if it’s only three games into a 162-game season. The first two games were back-to-back walk-off wins, carrying some eerie similarities to Game 7 of the World Series, while Game 3 brought some power, including George Springer’s first homer of the season, along with first long balls in a Jays uniform from Okamoto and Sanchez. The new strike challenge system also made an early impression, with catchers now getting two opportunities to challenge an umpire’s call, keeping them if correct and losing them if not. Alejandro Kirk and Tyler Heineman made good use of it, flipping a few borderline calls in the Jays’ favour. Love it or hate it, it added a layer of anticipation without disrupting the flow, not unlike a tennis challenge in how it plays out. It’s still very early, but this was exactly how you want to start, with strong pitching, timely hitting throughout the lineup, and just enough late-game drama to get the crowd excited again.
Diversion: Smells like…cooking?
