16/04/2026
Market review
War changes everything
TThe outbreak of war in the Middle East and the resulting closure of the Strait of Hormuz are dominating events on the financial markets. This strait is one of the world’s most important waterways: a significant portion of the world’s oil and liquefied natural gas is transported through it. The disruption of this supply route has caused energy prices to surge sharply within a short period of time. This has far-reaching consequences: inflation is rising, economic growth is at risk of slowing, and central banks face a difficult dilemma.
Stock markets worldwide have reacted and have declined noticeably since the end of February. Nevertheless, the U.S. economy started the new year in fundamentally good shape. Consumer spending, corporate profits, and U.S. industrial production performed better than expected. The U.S. labor market remains stable, albeit without much momentum. Employment growth is no longer as broad-based as in previous years. However, the situation has deteriorated with the war in Iran.
Rising energy prices have once again fueled U.S. inflation. The Federal Reserve has therefore left interest rates unchanged and is likely to keep them that way for the time being. Expected interest rate cuts are likely to be postponed. At the same time, American consumers are increasingly concerned about their purchasing power, which is weighing on sentiment.
Switzerland: A safe haven, but not entirely unaffected
By comparison, the Swiss economy is proving relatively resilient. Inflation is very low, at just above zero percent. The labor market has stabilized, and the economic outlook was positive until recently. Switzerland benefits from being less dependent on oil and gas than its European neighbors, which somewhat mitigates the energy price shock. As expected, the Swiss franc has appreciated in this uncertain environment. This is hardly noticeable in everyday life for many Swiss people, but it weighs on the export-oriented Swiss economy, as it makes its products more expensive abroad.
The Swiss National Bank has left the key interest rate unchanged at zero percent and signaled that it will intervene in the foreign exchange market if necessary to prevent an excessive appreciation of the Swiss franc. Interest rate cuts or hikes are not currently foreseeable. With the slump in ETH Zurich’s key economic barometer in March, the outlook for the Swiss economy has also dimmed. The indicator fell below the long-term average for the first time in several months. This represents an initial warning sign that the effects of the conflict are increasingly being felt in Switzerland. A continuation of the current growth trajectory appears increasingly unlikely if the conflict persists.
Europe: Between Hopes of Recovery and a New Energy Shock
At the start of the year, the European economy was on a cautious path to recovery. The German economy, in particular, was showing initial signs of improvement, supported by fiscal policy measures such as increased defense spending and infrastructure programs. In France, however, the situation remained difficult: economic sentiment was subdued, and growth was still slow to materialize. The eurozone as a whole experienced a moderate but fragile recovery.
The war in Iran significantly disrupted this upturn. Inflation in the eurozone rose noticeably in March and is now above the European Central Bank’s target. The rise in energy prices is quickly becoming evident at gas stations and in heating costs. Sentiment among European companies has deteriorated, particularly in energy-intensive industries and the services sector.
Consumer confidence in the eurozone has reached its lowest level in years. Against this backdrop, the European Central Bank faces a difficult balancing act: on the one hand, the energy price shock is driving up inflation; on the other, it is weakening economic growth. Combating both at the same time is virtually impossible. Compounding this is the fact that the situation varies greatly across individual member states, which further complicates the implementation of a unified monetary policy. Financial markets are already anticipating interest rate hikes, and leading economic research institutes have significantly revised their growth forecasts downward for the coming years
Equity markets
March was dominated by the Iran conflict and the resulting energy price shocks. Stock markets declined worldwide, with Asian markets particularly hard hit. South Korea, Japan, and China recorded significant losses in some cases, as Asia relies heavily on energy supplies passing through the Strait of Hormuz. European markets also suffered, particularly energy-intensive sectors that were already reeling from the aftermath of earlier energy price shocks. U.S. markets proved somewhat more resilient due to the country’s greater energy independence. Energy and commodity stocks, on the other hand, benefited from rising prices and were among the few winners of the month.
Interest rates
March brought a significant shift in the interest rate markets. At the start of the year, financial markets were still anticipating further interest rate cuts, particularly in the U.S. and Europe. The war in Iran has fundamentally altered these expectations: Rising energy prices and increasing inflationary pressure caused government bond yields to rise significantly worldwide. All major central banks kept their key interest rates unchanged, but the market now even expects rate hikes. The ECB is particularly in the spotlight, as it must take into account both rising inflation and weaker growth. The SNB remains at zero percent, and no interest rate moves are expected here in the near future either.
Currencies and commodities
he month of March was marked by significant volatility in energy prices. The price of oil rose by about 50%, while European natural gas prices surged by around 60%. Gas prices in the U.S., however, barely reacted, as the country is largely energy-independent. The U.S. dollar appreciated significantly against the euro and the Swiss franc, thereby confirming its role as the global reserve currency in times of economic uncertainty. Gold, on the other hand, lost significant value despite the war-torn environment, as rising interest rate expectations and a strong U.S. dollar weighed on the precious metal. Copper also declined, due to growth-related concerns.