Oil Surges on Iran Tensions as Tech Giants Tumble into Bear Market

Geopolitical Shocks Ripple Through Global Supply Chains

Market volatility is being fuelled by the ongoing war in Iran and the resulting disruption to global supply chains. The partial closure of the Strait of Hormuz, a critical channel that handles 20% of the world's oil, has sent prices spiralling upwards. U.S. West Texas Intermediate (WTI) crude has settled above $100 for the first time since 2022, while Brent, the international benchmark, is on track for its largest monthly gain on record, soaring about 55% this month. In the US, the average price of petrol has hit $4 per gallon for the first time since 2022.

The situation is made more unpredictable by a flurry of conflicting statements from the U.S. government, causing oil prices to swing wildly. However, stock futures saw a brief rally on reports that a diplomatic solution was being sought to end the war. This uncertainty is compounded by a report alleging that the U.S. Defense Secretary sought to make a large investment in defence companies shortly before the war began, a claim the Pentagon has denied.

The Plastic Squeeze

While attention has focused on fuel, the strait's disruption is now squeezing the petrochemical supply that forms the building blocks for plastics. These oil-based inputs are in everything consumers touch, and inflation is now working its way through the system.

• Chinese plastic suppliers have reportedly raised prices by around 15%, citing raw material costs.
• This has led to the largest monthly price increase for polyethylene, a common plastic, in 25 years.
• As a result, packaging company stocks like International Paper (IP), Graphic Packaging Holding (GPK), and Amcor (AMCR) have fallen by nearly 20% in the past month.

Food and Freight Under Pressure

Just as big food companies were preparing to offer consumers some relief, this new wave of inflation has blown their plans apart. Companies like PepsiCo and Kraft Heinz, who had acknowledged their prices were becoming unfriendly to shoppers, now face a renewed squeeze.

Higher oil costs are pushing up prices for fertiliser and plastic packaging. At the same time, diesel prices in the US are up around 40% since late February, increasing the cost of transporting goods. The pressure is now visibly passing to consumers. Airline JetBlue has raised its checked bag fees, citing fuel costs, while Chinese manufacturers of consumer goods are warning that Americans should prepare to pay more. Some suppliers have cautioned that the U.S. could face product shortages if the Strait of Hormuz blockade continues.

Aluminium Hits 2022 Highs

The impact isn't limited to oil and plastics. Aluminium prices have also jumped to their highest point since 2022, climbing 5.5% on Monday. With around 10% of the world's aluminium produced in the Gulf region, fears of a shortage are growing. This has directly benefited producers, with shares in companies like Century Aluminum (CENX) and Alcoa Corp (AA) rising over 7% and 8% respectively.

Tech Sector's Two-Front War: Valuations and Supply Chains

While commodities are booming, the technology sector is facing a sharp correction, contributing to the worst monthly and quarterly losses for the major US stock indices since 2022. This nervousness is captured by the CBOE Volatility Index (VIX)—often called Wall Street's 'fear gauge'—which has surged by more than 50% in March. Chipmaker Nvidia, a market favourite, has seen its shares fall 21% from their November high. A drop of 20% or more from a recent peak officially places a stock in a 'bear market', signalling a significant downturn in investor confidence.

Nvidia is not alone. Other technology titans including Alphabet (Google), Amazon, Meta (Facebook), and Microsoft are all down for the year. However, some see opportunity in this weakness. Billionaire investor Bill Ackman has suggested this is "one of the best times in a long time to buy quality" companies. This view is supported by a narrowing valuation gap between the tech-heavy Nasdaq 100 and the broader S&P 500, with all of the 'Magnificent Seven' tech stocks now sitting more than 10% below their recent highs.

The AI Hardware Crunch

Compounding the valuation concerns is a new, physical problem: a global shortage of components. The huge demand for computing power from the Artificial Intelligence industry is gobbling up the world's supply of RAM (computer memory). This is pushing up costs and threatening to end the era of affordable electronics.

• Sony has responded defensively, increasing the price of its PlayStation 5 by up to $150 in some markets to protect its profit margins.
• Apple, by contrast, is using its huge purchasing power to launch new, aggressively priced products like the MacBook Neo, aiming to undercut rivals struggling with component costs.

Despite Apple's move, experts predict electronics prices could climb 20% through 2027, potentially eliminating the 'budget' laptop category entirely.

The Fed's Wait-and-See Approach

Despite the surge in energy prices and the new inflationary pressures emerging in plastics and food, the US Federal Reserve is holding its nerve. Fed Chair Jerome Powell has indicated that the central bank will not be rushed into raising interest rates.

He argues that the energy shock could be over by the time any rate hikes would take effect, and that for now, long-term inflation expectations remain stable. Fed Governor Stephen Miran echoed this sentiment, stating that policymakers can ignore the energy price increase for now, as he has seen no signs of a 'wage-price spiral'—where rising wages and prices feed off each other. This calm stance is reflected in consumer behaviour. A new report shows that while Americans are spending more on fuel, they haven't cut back on big-ticket items. Spending on holidays and flights is actually up compared to this time last year, suggesting confidence in the economy remains robust.

Healthcare Giants Battle for Weight-Loss Market

Away from the macroeconomic turmoil, a fierce battle is heating up in the lucrative market for GLP-1 weight-loss drugs. Novo Nordisk is launching multi-month subscriptions for its popular Wegovy treatment, offering discounts for longer-term packages for both its injection and new pill form.

This move is a direct challenge to its rival, Eli Lilly, which currently commands an estimated 60% of the branded GLP-1 market in the U.S. and is expected to launch its own new oral treatment later this year. The strategy aims to build customer loyalty in a rapidly growing and competitive space.

Emerging Trends in Investing

Beneath the headline news, several important shifts are taking place that could reshape investment portfolios. The world of digital assets, in particular, is maturing from a niche interest into a foundational layer for the next generation of finance.

Precious Metals Lose Their Shine

In a surprising turn during a period of high uncertainty, precious metals have not acted as a safe haven. As investors have scrambled to cover losses elsewhere or chase commodity gains, gold and silver have tumbled, falling more than 13% and 24% respectively in March.

Crypto Miners Pivot to AI

Artificial Intelligence is beginning to draw capital away from the cryptocurrency world. Major Bitcoin mining companies, such as MARA Holdings, are reportedly selling their crypto assets to invest in hardware for AI applications. The economics are simple: it currently costs about $90,000 to produce one Bitcoin, which is trading for around $67,000. This unprofitable environment has led to a 4% drop in crypto mining computing power since January.

The Mainstreaming of Digital Assets

The integration of digital assets into the traditional financial system is accelerating, with major players on Wall Street and in government taking significant steps.

Wall Street Builds On-Chain

Major financial institutions are actively moving to use blockchain technology—a secure, shared digital ledger—for core operations. This 'on-chain' shift promises 24/7 trading and instant settlement, a huge change from the current system.

• The DTCC, which handles the clearing for nearly all US stock trades and processed an incredible $3.7 quadrillion in 2024, is preparing to launch a system for tokenized US Treasuries.
• The New York Stock Exchange (NYSE) and Nasdaq are both developing their own on-chain platforms to settle stocks and ETFs around the clock.
• The scale of this shift is underscored by data on stablecoins—digital tokens pegged to currencies like the US dollar—which processed over $33 trillion in 2025, surpassing the combined volume of Visa and Mastercard.

Regulation and Adoption Gathers Pace

Governments and regulators are building frameworks for these new assets. In the US, a proposed rule from the Labour Department would allow alternative assets like private equity and crypto into 401k workplace pensions, potentially unlocking a vast new pool of capital. Alongside this, new legislation has been proposed to create a Strategic Bitcoin Reserve for the US and encourage domestic crypto mining hardware production, reducing reliance on China.

Meanwhile, in Europe, French banking giant BNP Paribas has launched six crypto-linked investment products for its retail clients, signalling growing acceptance and demand across the continent.

Ethereum's Next Chapter

The ecosystem around Ethereum, the world's second-largest cryptocurrency, is also evolving rapidly. The focus is shifting from pure speed to building a more integrated and secure platform.

• A New Framework: The Ethereum Foundation is repositioning its secondary networks (known as 'Layer 2s') as specialised 'feature platforms' for things like privacy or compliance, rather than just tools for scaling. The main network will serve as the core settlement hub.
• Future-Proofing: Developers for Ethereum, Bitcoin, and Solana are actively working on defences against the threat of quantum computers, which could one day be powerful enough to break today's encryption.

Global Housing Market Cools

The housing market is showing clear signs of slowing down. Geopolitical tensions have rippled through bond markets, pushing US mortgage rates up from 5.99% in February to a painful 6.62%. This is colliding with a market where the median home already costs about five times the median household income, pushing ownership out of reach for many.

This cooling trend is visible globally. In the UK, buyer interest fell by 13% last month compared to the previous year, while in Ireland, house price growth has slowed to a near three-year low.

Corporate Moves in a Tough Market

In a sign of consolidation amid the slowdown, property technology company Opendoor is acquiring the closing and escrow businesses of rival Doma. The move is an effort to use artificial intelligence to make real estate transactions more affordable, particularly as the sharp rise in mortgage rates has dampened the home loan refinancing market.

Amid this slowdown, a unique trend is emerging in the US, where Japanese construction firms have purchased 23 American home builders since 2020. With interest rates in Japan still near zero, these companies can borrow money more cheaply than their American rivals, allowing them to bid higher for assets.

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NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).