Annual report 2024

Fahad Hassan, CIO Executive summary US-Israel-Iran conflict has effectively closed the Strait of Hormuz, oil and gas prices are higher. Portfolios had already been defensively positioned — gilts exited, duration cut, UK mid-caps and European small caps removed — all of which have since fallen sharply. Macro The last month has seen a reset of inflation expectations, as the US and Israel entered a conflict with Iran. The Strait of Hormuz, a narrow body of water responsible for

Fahad Hassan, CIO The last few weeks have seen a reset of inflation expectations, as the US and Israel entered a conflict with Iran. The Strait of Hormuz, a narrow body of water responsible for 20% of the world’s seaborne oil supply, is effectively closed. Oil prices are materially higher and could go much higher still. Natural gas, a key input into fertiliser production, has seen a large jump in price, which in turn is causing an increase in food prices.   Like in 2022, gove

It is impossible to second guess the next move in markets given the underlying complexity of the war in Iran. Particularly given the impact that President Trump’s comments are having on markets. What is becoming increasingly apparent is that even with a swift resolution to the conflict, the disruption from the war will result in inflated energy costs for some time. 

This week's Fed meeting, alongside the Bank of England and the European Central Bank (ECB) meetings provide a good opportunity to consider how far markets have already moved this year.

Escalating conflict in the Middle East was the dominant driver of global markets in early March. The conflict raised concerns that the situation could broaden, particularly given the proximity to critical energy infrastructure and shipping routes such as the Strait of Hormuz, through which a significant share of global oil supply passes and which travel through remains disrupted.