Monthly Report

Garton Global | Monthly Market Digest

Sterling entered April on a weaker footing as escalating disruption in the Middle East, alongside inconsistent US policy signals, left markets struggling for direction. Globally, oil prices remained elevated as the Strait of Hormuz stayed effectively blocked, tightening supply and reinforcing fears of a broader economic shock through higher inflation and slower growth. Markets turned cautious amid persistent volatility, with investors focused on geopolitical developments and energy flows as key drivers of the near-term outlook.

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LAST MONTH: MARCH

🇺🇸 Oil surged as Middle East war threatened supply routes and lifted haven demand

• Brent crude surged as the US-Israel assault on Iran, Tehran’s retaliation and collapsing traffic through the Strait of Hormuz intensified fears of a sustained supply shock. 
• Gold also advanced as investors sought safety, while rising energy costs darkened the outlook for global growth and inflation. The move kept markets volatile, supporting the US dollar and weighing on risk assets and energy-importing currencies.

🇬🇧 Europe and the UK weakened as the energy shock revived stagflation fears

• European and UK markets weakened as surging oil and gas prices pushed up inflation expectations while eroding growth prospects. 
• Higher energy costs raised pressure on households, business demand and housing, while bond yields climbed as investors reassessed the rate outlook. The result was a classic stagflation trade: softer risk sentiment, tighter financial conditions and renewed pressure on consumer-facing assets.

🇺🇸 US dollar strengthened as safe-haven demand rose, pressuring EUR and GBP

• The US dollar strengthened as geopolitical risk and higher yields drove safe-haven inflows despite unstable cross-asset correlations.
• The euro and pound weakened on exposure to rising energy costs, with sterling further pressured by soft UK data and political uncertainty.
• The divergence reinforced a firmer USD backdrop, keeping EUR/USD and GBP/USD biased lower amid ongoing macro stress.

THIS MONTH: APRIL

🇺🇸 Markets face uncertainty as Trump policy reversals keep investors in limbo

• Global markets face uncertainty as shifting signals from Donald Trump on Iran policy continue to cloud the conflict’s direction.
• Ongoing swings between escalation and diplomacy risk undermining conviction and limiting clear positioning across assets.
• The lack of clarity is likely to keep volatility elevated, with investors cautious on extending risk despite potential relief rallies.

🇺🇸 Oil faces upside risk as Strait of Hormuz disruption threatens broader economic stability

• Oil faces upside risk as the continued blockage of the Strait of Hormuz is expected to sustain supply constraints and energy market stress.
• Ongoing disruption to shipping flows risks keeping upward pressure on prices, reinforcing inflation across major economies.
• The environment raises the risk of a broader economic slowdown, with elevated energy costs threatening growth and financial stability.

Have a great month,
The Garton Team.