HL commentary as it happens

The latest British Chambers of Commerce business confidence survey shows a dip even before the Iran war

The double whammy of energy and labour costs rising has also impacted business confidence, the British Chamber of Commerce quarterly economic survey reveals. Surveyed before the outbreak of war in Iran, businesses were divided on whether the next 12 months would prove positive; as today’s minimum wage and national living wage hikes came into effect, and policy uncertainty weighed on investment decisions.

In recent years, UK businesses have faced rising energy and input costs, an increase in employer NICs contributions as well as wage increases. Despite these domestic headwinds it is worth noting that the FTSE 100 had one of its best years on record in 2025 – rallying more than 20% and outperforming even the S&P 500. The international nature of the UK stock market, which gets 70% of its revenues from overseas, as well as sector biases towards banking, defence and oil and gas firmed helped buoy the market. A reminder to investors that while domestic policy matters for GDP growth and economic stability, global factors play a much biggest part in determining asset price returns.

The IPPR reveals that the UK is lagging G7 peers when it comes to business investment

The Institute for Public Policy Research (IPPR) has revealed that UK businesses invest around 11% of GDP annually, less than all the other G7 nations bar Canada. This lack of investment is expected to impact both productivity and the growth potential of businesses and the economy. It is particularly acute in the manufacturing sector, where we are nearly 50% behind the rest of the G7. This productivity lag is a long-term trend for the UK, which has struggled to keep pace with peers following the global financial crisis, compounded by Brexit. Budget uncertainty over the past two years has also slowed business decisions, as have rising energy and labour costs – even before the war in Iran.

Asia markets have continued the S&P 500 optimism, rising on hopes of the Middle East war ending

Markets paint an optimistic picture this morning – choosing to believe the optimism from the White House that the war in Iran will be over in a couple of weeks. US President Donald Trump yesterday announced that he saw the war ending within a couple of weeks, and that he would be addressing the nation with further details later today.

This was enough to propel the S&P 500 into a relief rally, up 2.9%, the best day for the market since May last year. Asian markets have continued the optimism early today, with the Hang Seng in Hong Kong up nearly 2%, and the Nikkei in Japan jumping 4.56%.

Brent Crude little moved at around $107 per barrel

Brent crude oil prices have come off the top a little, sitting at about $107 per barrel, after Donald Trump suggested he may be considering an early end to military action, but it’s hard to tell if that’s fact or bluff, as around 2,500 US paratroopers arrived in the region, and rumours of a mission to capture the strategically important Kharg island continue to circulate.

US stock futures rise

US stocks futures are up, implying a rebound from Monday’s dip at the open. Events in the Gulf continue to drive sentiment, but one economic data point that could move the dial today is the Conference Board Consumer Confidence Index, which is expected to have weakened from 91.2 in February to around 88.0 as US shoppers weigh up the impact of gasoline prices crossing the $4 for a gallon for the first time in three years.

UK real GDP growth confirmed at 0.1% for Q4 2025

Confirmation that the UK economy barely grew in the final quarter of 2025 (real GDP +0.1%) hasn’t upset the apple cart, but the potential for activity to dip won’t be lost on the Treasury as the Chancellor battles to balance the books. Overseas borrowing as a percentage of GDP grew from 1.6% to 2.5% in the space of a quarter. With 10-year gilt yields at their highest levels since 2008, that will make uncomfortable reading for Rachel Reeves, as central banks hold off further rate cuts until the inflationary impact of the Middle East conflict and oil price spike becomes clearer. As it stands, markets expect UK rates to rise before loosening can start again.

Oil ticks higher as de-escalation doubts mount

Oil prices jumped about 3% to start the week, with crude holding at its highest level since mid-2022 amid the Iran conflict. Doubts over a quick resolution have grown after Iran‑backed Houthi militants stepped up attacks in the region, and the US moved additional troops closer to the conflict. With the Houthis threatening Red Sea shipping lanes and key energy infrastructure, and rumours that Washington is preparing for ground operations, traders are bracing for more supply risk and further price volatility.

US markets brace for a string of economic data points

US markets remain under pressure, with the S&P 500 now 9% below its January peak as investors brace for a heavy week of data. The spotlight will fall on Friday's March jobs report, where payrolls are expected to rebound after February's surprise drop. A busy calendar also brings the ISM Manufacturing PMI, retail sales, JOLTs job openings, and the monthly trade balance, all of which will help shape views on the strength of the economy.

UK markets battle with rate hike expectations

UK stocks look set for a choppy start, as the FTSE 100 opens slightly higher this morning. With only a light run of company updates ahead, geopolitics is likely to be the main driver of sentiment. Investors are also adjusting to a backdrop where interest rate expectations have shifted, with markets now firmly pricing in rate hikes this year – though we know how quickly these odds can shift.

Volatile week ahead as Vix reaches tariff tantrum levels

Global markets are heading into the week on edge as the Iran conflict continues to cast a long shadow. Fresh worries that troops could be drawn further into the conflict are keeping volatility elevated and confidence fragile. With the volatility index (Vix) closing last week at 31, its highest level since last April's tariff tantrum, investors should be prepared for another turbulent week.

US market sell-off showcases the benefits of diversification

US markets had a tough day at the office, though futures hint at a modest clawback later today - as ever, though, we know sentiment can shift quickly before the opening bell. It did, however, serve as a useful reminder of why diversification matters. While tech stocks took a hefty tumble, the equal‑weighted S&P 500 quietly finished the session broadly flat, suggesting the pain wasn’t as broad‑based beneath the surface. Social media names were firmly in the firing line as investors digested a run of jury verdicts linked to mental health and child safety concerns. Both are hugely important issues with clear work still to be done, but yesterday’s narrative that this represents a “Big Tobacco moment” for the sector feels a little overdone.

UK markets react to retail sales and consumer confidence data

Fresh retail sales data showed volumes slipped 0.4% month‑on‑month in February, a smaller fall than expected, meaning activity has, for now at least, held on to much of its early‑year momentum. But weakening consumer confidence is likely the more telling signal, with the GfK reading dropping to an 11‑month low in March as households grapple with the twin threat of higher inflation and softer growth prospects. Markets are currently pricing around a 70% chance of a rate hike in April, but with sentiment already starting to wobble and growing risks to the growth outlook, a pause from the Bank of England could be the more measured prediction.

Higher bond yields put pressure on finding a swift resolution in Iran

Government bond markets weakened through the session yesterday. Normally, when equity markets wobble, you’d expect bonds to act as a buffer as investors seek safety, but yields pushed higher as markets continued to price in inflation and interest rates staying higher for longer. We know the White House keeps a close eye on the bond market, so pressure will be mounting to secure a deal in the Middle East sooner rather than later.