Private Wealth

2 April, 2026

Within just a few weeks, the war in the Middle East has evolved from a regional escalation into a global source of uncertainty. Since the joint U.S. and Israeli strikes on Iranian targets at the end of February, the situation has not calmed. Instead, it has entered a new phase marked by mutual threats, limited military strikes, and mounting economic fallout. Particularly consequential was the de facto blockage of the Strait of Hormuz, which severely disrupted energy trade and pushed markets into a state of constant alert. The economic impact was therefore not confined to the region. Within days, it spread through commodities, transport chains, inflation expectations, and risk premia into bond and equity markets around the world. That is the central point of this conflict: a war shaped in political terms in Washington creates economic costs that are distributed far beyond the United States.

Donald Trump is at the center of this story. Not only because the United States joined Israel militarily, but also because the president has accompanied the conflict with messaging that has added to uncertainty. At times he has threatened to broaden the attacks to include Iran’s energy infrastructure; at others, he has spoken of a possible ceasefire; then again, he has suggested a swift U.S. withdrawal, only to emphasize shortly afterwards that operations could continue without a clear end date. For markets, this inconsistency is not a side issue. It is part of the problem. It makes it harder to form reliable expectations and thus increases volatility.

In addition, markets still react in the short term to Trump’s verbal signals, but they appear to attach less and less strategic credibility to them. In recent weeks, even hints of talks or a possible agreement were enough to push oil prices temporarily lower and support risk assets. Just as quickly, however, those moves were reversed when new threats emerged from the White House or Iranian officials directly contradicted Trump’s narrative. This sequence of hope, denial, and renewed escalation has entrenched rather than reduced market swings. Politically, this reveals a president who sees maximum pressure as a negotiating tool. Economically, it means that the world is already paying a price, even if a diplomatic off-ramp is ultimately found.

Against this backdrop, the OECD has also revised its assessment. In its projections, it points to significantly higher inflation risks, meaningful downside risks to growth, and a downgrade to its expectations for the global economy. For 2026, it now sees global growth at just 2.9%, while G20 inflation has been revised up to 4.0% compared with the December outlook. The OECD expects growth of 2.0% for the United States and 0.8% for the euro area. More important than the precise figures, however, is the message behind them: the conflict is not transmitted through oil alone, but also through gas, fertilisers, supply chains, confidence, and investment decisions.

At the same time, it would be premature to draw final conclusions about the economic consequences. Both central banks and international institutions have made that clear. It remains uncertain how long the disruptions will last, how strong second-round effects on wages and core inflation will be, and how much fiscal support governments will ultimately provide. That is precisely why uncertainty remains so elevated: the direction is visible, but the magnitude is not.

And there is still a constructive base case for the current year. In the United States, solid corporate investment, particularly in digitalisation and artificial intelligence, continues to support activity. In Europe, government programmes are providing stabilisation, and even in Germany, recent research suggests that more expansionary fiscal policy is cushioning domestic demand. The fundamental drivers remain intact, even if geopolitical noise is overshadowing market moves. Markets will have to live with the headlines. What matters is that the economic foundations beneath them remain resilient. That is what will need to be assessed in the weeks ahead.