Trump rhetoric escalates Iran crisis

In a truncated week’s trading in the UK ahead of the Easter weekend, markets were roiled by an address to the US public by Donald Trump on the Iran crisis that appeared to escalate the crisis towards the end of week. Prior to this address, equity markets had been recovering some losses. 

In a televised address, the US president threatened to hit Iran “extremely hard” in the coming weeks, dashing investor hopes of a swift end to the conflict. Despite the threats, Mr Trump cast the Iran war as completing “very shortly”, claiming US forces had achieved “overwhelming victories” while insisting the campaign would continue with extremely hard strikes over the next two to three weeks. He boasted that Iran’s military and leadership had suffered “devastating” losses and argued that a form of regime change had already occurred, saying a “more reasonable” group of Iranian leaders was now in place. Still, he warned that if Tehran did not strike a deal, the US was prepared to obliterate Iranian electric‑generation and oil facilities, vowing to “bring them back to the stone ages”. He also acknowledged public unease over surging fuel prices but maintained that gas costs would fall once the war ends. We view this as an escalation of the situation which aims to ultimately cause a de-escalation. Mr Trump is clearly seeking an off-ramp as the war remains unpopular in the US and the situation could have a significant impact on the mid-term elections in November this year. 

Most Western markets globally closed early for the Easter weekend, but US markets remain open. On Good Friday, the US releases a key jobs report that the Federal Reserve will pay close attention to as the outlook for monetary policy gets more complex. 

The FTSE 100 was xx% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading xx%.

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Middle East

The Iran war entered a more volatile phase, with escalating military strikes, stalled diplomacy and a near‑shutdown of the Strait of Hormuz combining to push oil markets into their most dramatic upswing in decades while global equities slumped.

Tensions flared after the US and Israel launched fresh strikes on Iranian nuclear and industrial facilities, including the country’s largest flat‑steel producer and the Khondab research reactor. Tehran responded by declaring steel plants across the Middle East legitimate targets, heightening fears of a broader regional conflict. At sea, the Strait of Hormuz – a chokepoint for more than 20% of global oil and gas flows – remained largely shut, with container ships forced into abrupt U‑turns as Iran turned vessels back from the Gulf. The conflict had sharply constrained global supply of oil. Analysts estimated that as much as 9 million barrels a day had been knocked out of the market. 

Diplomacy offered little relief. US president Donald Trump extended a pause on strikes against Iranian energy infrastructure, insisting talks were “going very well” and pointing to a 15‑point peace proposal presented by Washington. Iran nevertheless continued missile and drone attacks on Israel and Gulf states, while Israel struck targets in Tehran and Beirut. Meanwhile, US officials confirmed that a maintenance site linked to a Patriot air defence system in Bahrain had also been hit. 

The final days of the week delivered little comfort. In a national address on Wednesday, US President Trump pledged that the US would continue hitting Iran “extremely hard” and signalled that strikes on energy and oil facilities would intensify in the coming weeks. The remarks pushed up Brent oil prices once more as the markets had hoped for some pointers on closure of the situation which failed to emerge. 

With the Strait of Hormuz still constrained, diplomatic efforts faltering and both sides signalling a readiness to keep fighting, markets closed the shortened week braced for more turbulence – and with little indication that the worst of the war’s economic shock has yet passed.

The link between oil and food prices. 

Economics 

UK final fourth‑quarter Gross Domestic Product (GDP) figures showed the economy eking out another 0.1% expansion in the last three months of 2025, unchanged from both the preliminary estimate and the previous quarter’s pace, according to the Office for National Statistics. Growth was driven by a 1.2% rise in production – particularly manufacturing – while construction contracted 2% and the dominant services sector flatlined. On an annual basis, GDP rose 1.4% in 2025, slightly stronger than previously thought, but real GDP per head dipped 0.1% on the quarter. The data confirm that Britain ended the year with only marginal momentum, underscoring the challenge for policymakers as they weigh the timing of potential rate cuts amid a sluggish backdrop. 

On Good Friday, the US will release its non-farm payrolls data. The US employment report will be closely watched after February’s figures showed a surprise loss of 92,000 jobs – the weakest performance in four months – driven by declines in health care, information, manufacturing and federal government employment, partly reflecting strike activity. Forecasters expect a modest rebound, but labour‑market uncertainty remains elevated amid shifting immigration flows and debate over how many jobs are needed each month to keep the unemployment rate steady. The release is significant because non‑farm payrolls remain the bellwether of US economic momentum: a stronger‑than‑expected print could revive hopes that the economy is weathering geopolitical and inflationary headwinds, while a weaker reading may prompt markets to reassess the Fed’s rate‑cut trajectory.

On Good Friday, the US will release its non-farm payrolls data. The US employment report will be closely watched after February’s figures showed a surprise loss of 92,000 jobs – the weakest performance in four months – driven by declines in health care, information, manufacturing and federal government employment, partly reflecting strike activity. Forecasters expect a modest rebound, but labour‑market uncertainty remains elevated amid shifting immigration flows and debate over how many jobs are needed each month to keep the unemployment rate steady. The release is significant because non‑farm payrolls remain the bellwether of US economic momentum: a stronger‑than‑expected print could revive hopes that the economy is weathering geopolitical and inflationary headwinds, while a weaker reading may prompt markets to reassess the Fed’s rate‑cut trajectory.

The US Job Openings and Labor Turnover Survey (Jolts) report for February showed job openings holding essentially steady at 6.9m, while hiring slipped to 4.8m – its lowest level since early in the pandemic – underscoring a labour market that is cooling but not collapsing. Quits held at 3.0 million and layoffs remained low at 1.7 million, painting a picture of a jobs landscape stuck in “low‑hire, low‑fire” mode. Jolts is one of the Federal Reserve’s key barometers of labour‑market tightness: fewer openings and subdued quits signal weakening worker confidence and reduced wage‑pressure risks, while still‑low layoffs suggest employers are cautious but not panicked. This softening could nudge the Fed towards future rate cuts, but elevated inflation risks – particularly from the Iran‑driven oil surge – complicate the outlook. 

US consumer confidence edged higher, with the Conference Board’s index rising to 91.8 in March from 91.0 in February, as a stronger assessment of current business and labour market conditions outweighed a further softening in expectations. The Present Situation Index climbed to 123.3, but the Expectations Index slipped to 70.9, reflecting persistent concerns over inflation, driven by tariff pass‑through and a surge in oil and gasoline prices linked to the Iran conflict. Economists noted that confidence remains on a downward trend since 2021, with inflation expectations jumping to their highest level since August 2025 and more households anticipating higher interest rates over the next year.

Eurozone inflation jumped to 2.5% in March, up from 1.9% in February, as an energy‑price shock linked to the Iran conflict pushed headline inflation above the European Central Bank’s (ECB’s) 2% target. The surge was driven almost entirely by a sharp rebound in energy costs – which swung from a 3.1% annual decline to a 4.9% increase – while core inflation eased slightly to 2.3%, pointing to a first‑round energy shock rather than broader price pressures. The jump, the steepest since 2022, has intensified debate over whether the ECB will be forced into fresh rate rises, with policymakers warning that prolonged geopolitical disruption could fuel further inflation and threaten already weakening economic momentum. 

European Union (EU) unemployment ticked higher in February, with the eurozone jobless rate edging up to 6.2% from 6.1% in January, while the wider EU rate held steady at 5.9%. Eurostat estimates show 13.1m people were unemployed across the bloc, including nearly 10.9m within the single currency area, with youth unemployment rising marginally to 15.3% in the EU and holding at 14.9% in the eurozone. 

Company news

Elon Musk’s SpaceX has taken its most decisive step yet toward going public, reportedly filing paperwork for an initial public offering (IPO) that could become the largest stock market debut in history. According to reports, the company is targeting a valuation of more than $1.75 trillion, building on its recent merger with Elon Musk’s AI venture xAI, which valued the combined entity at about $1.25 trillion. The confidential Securities & Exchange Commission filing allows SpaceX to undergo regulatory review behind closed doors ahead of an expected June listing, with estimates suggesting the company could raise up to $75bn, far surpassing the record set by Saudi Aramco in 2019. Investors are already treating the move as a landmark moment for the commercial space sector, with analysts noting that the offering would mark space exploration’s shift from speculative pursuit to mainstream capital‑markets juggernaut. The news came in the week that Nasa launched its Artemis rocket, which is scheduled to orbit the Moon ahead of a planned landing on the celestial object in 2028.

Virgin Galactic reported full‑year 2025 revenue of $275m – a 35% rise on the previous year – driven by an expanded flight schedule that included 12 successful spaceflights and the growth of its SpaceShipTwo fleet to five craft. The company ended 2025 with $338m in cash and a full‑year net loss of $279m, while continuing to invest in next‑generation spacecraft, with its first new vehicle nearing ground testing and commercial operations targeted for late 2026. Ticket sales have reopened at $750,000 per seat as Virgin Galactic positions itself for a ramp‑up in commercial space activity. 

Pets at Home said its full‑year performance will land in line with guidance, forecasting underlying pretax profit of about £92m for the year to 26 March, down from £133m the previous year, as the retailer continues to push through a turnaround in its core operations. The group reported cost savings of £20m despite £7m of non‑underlying charges, noted improving like‑for‑like retail sales in the second half, and highlighted another strong year for its vets division, which is set to deliver roughly £83m in pretax profit, up from £75.9m. It also confirmed a shift in shareholder returns, re‑basing its dividend payout ratio to 50% and signalling further buybacks after returning around £85m to investors during the year. Pets at Home expects to close the year with a net cash position of about £20m. 

Nike’s latest quarterly results showed a mixed but slightly better‑than‑expected performance, with third‑quarter revenue holding flat at about $11.3bn and earnings per share coming in at $0.35, ahead of analyst forecasts. However, net income fell 35% to $520m as gross margins contracted, pressured largely by higher tariffs in North America and ongoing weakness at Converse. The company’s turnaround under chief executive Elliott Hill delivered pockets of progress – notably a stronger showing in North America and wholesale – but China remained a drag, with revenues declining amid softer demand. Overall, Nike stressed it is still in the “middle innings” of its recovery, maintaining that recent “Win Now” actions are improving the health of the business even as the pace of progress varies across regions.