Marcus Ashworth

Where can investors find safety from the market oscillations triggered by the Iran war? There are no reliable havens right now; even the dollar, typically the biggest beneficiary of a flight to safety, has made only modest gains compared with the world’s major currencies. Monies that are flowing into the greenback are evidently not being invested so much in US equities or bonds, both of which are struggling, but instead are being parked in cash. Gold has lost a quarter of its value from its peak

Gold's reputation as the ultimate store of value has been tarnished by its 15% decline since the Iran conflict began. It's failed to act as a haven or a geopolitical hedge. However, that’s not unusual — the pattern seen this month mirrors similar price corrections during the 2008 global financial crisis and when Covid struck in March 2020. After all, gold is easy to sell and many holders will be able to reap large profits: Despite the recent drop, it's still up by more than 50% in the past year.

Customize Consent Preferences Gold's reputation as the ultimate store of value has been tarnished by its 15% decline since the Iran conflict began.

Why is it that the UK fares worse in times of crisis than its euro area peers? Structural rigidities embedded in the UK economy, such as government-administered utility prices and inflation-protected public sector wages, make price increases much stickier. That's been instantly reflected in the faster increase in gilt yields combined with a more concerned central bank response to the prospect of rising consumer prices. Prior to the Iran war, the UK was expected to outperform its euro area peers

Even if the Iran conflict ends fairly soon, the world economy will suffer collateral damage. Energy-price increases may be the most visible effect, but how long they remain elevated will determine the extent of damage to supply chains — and how heavy the hit will be to global growth.

The Iran conflict is poised to inflict collateral damage on the global economy, with rising energy prices already impacting inflation and consumer costs.

Britain is facing a double squeeze on wages and jobs over the course of this year. The signs are not promising for how an economy that’s basically stopped growing will cope with a shock to energy prices. For the average worker, the outlook is for more trouble ahead, with incomes stagnating even as consumer prices increase and the jobless rate looks set to climb even higher.

Newly elected Hungarian Prime Minister Peter Magyar just said the quiet bit out loud: It’s time to properly come into the European Union fold and, eventually, adopt the euro.

European stocks started the year much stronger than their US peers but the tantalizing prospect of the euro area clawing back some of its persistent gap in earnings growth, and the higher company valuations that come with it, looks to have slipped through its grasp again.

Should central bankers be in the business of saying that the stock market will fall or that private markets are in a credit crunch? In a BBC interview last week, Sarah Breeden, the Bank of England deputy governor responsible for financial stability, said: “There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.” This strikes me as mission creep.