Market update by Omnis Investments - 12th March 2026

Answering 10 common questions investors may have about the Middle East conflict

1. What’s happening?

Recent developments in the Middle East have created uncertainty in global markets. There have been shifting signals from the US and Israel about the possibility of easing tensions, alongside new reports of attacks and disruptions in the Strait of Hormuz—a vital route for global oil shipments.

Even though the US has announced plans to escort ships through the area, this will not immediately restore normal shipping levels. The uncertainty around oil supply continues to put upward pressure on energy prices.

Overall, this remains a fast‑moving situation with many political actors involved, meaning headlines can shift day‑to‑day.

2. Why does this matter for markets?

The main issue for financial markets is the price of oil.

When the supply of oil becomes squeezed:

• Energy prices rise

• Inflation increases

• Costs rise across the economy, from food production to transportation

• Consumer spending slows, because more money goes on essentials

This is known as a supply shock—and it can influence many parts of the global economy.

3. How long will this last?

It depends on how quickly tensions ease. The longer the conflict drags on, the more likely we see slower economic growth.

Markets are currently trying to assess:

• how long disruption will continue

• whether oil prices will stay elevated

• and what this means for inflation and interest rates

4. How have markets responded so far?

Despite worrying headlines, markets have held up better than many were expecting.

Historically, during conflicts or geopolitical shocks:

• Markets often fall quickly

• Then recover once uncertainty eases

This time:

• Equities have dipped but not dramatically across most markets

• Markets are reacting mostly to energy prices

However, if oil stays high for long, demand across the economy could fall. This would likely be negative for equities over the medium term.

5. Could interest rates be affected?

Before the conflict escalated, central banks, including the Bank of England, were preparing to cut interest rates as inflation was easing.

Now:

• They may pause and wait to see how energy prices evolve

• They do not want to repeat the mistakes of 2022 by reacting too slowly

• But if the energy shock proves temporary, they may still cut rates later this year

Importantly, we believe this type of inflation is unlikely to feed into wages, so it may not have the same long‑term risks as previous inflation spikes.

6. Could the US end the conflict?

If President Trump were to push for a de‑escalation, it would likely ease global tensions quickly.

However, several actors are involved, and their goals differ, so no single leader can fully control the outcome. The US can apply political pressure on Israel to de-escalate, although Iran’s position is less clear.

7. What should investors focus on?

Periods like this can feel unsettling, but they are not new. History shows that markets have been through similar shocks before—and recovered.

Remember that:

• Diversification works
  Different assets behave differently; when equities fall, bonds often rise.

• Portfolios are actively managed
  Omnis closely monitors economic, political, and market indicators to adjust portfolios when needed.

• Long‑term discipline is key
  Short‑term noise shouldn’t distract from long‑term goals.

• Downturns create opportunities
  If markets fall, holding a well‑managed and diversified portfolio means being better positioned for the recovery that follows.

8. What actions is the Omnis team taking within the portfolios?

We are monitoring events closely but making decisions rooted in our investment process—not in market noise.

Recent actions include:

• Taking profits in the energy sector after strong performance

• Reducing exposure to the US because of concentration risks

• Increasing allocations to bonds, which now offer better yields and diversification

• Viewing Japanese government bonds as particularly attractive diversifiers

These changes were planned before news of the conflict —they are part of a broader effort to reduce risk and position portfolios sensibly.

9. How are fund managers responding?

Our fund managers are closely monitoring developments and assessing what they mean for the funds. Most activity has been around risk management, hedging and modest tactical adjustments rather than wholesale changes.

Legal and General Investment Managers

• Reducing investments in European company bonds.

• Adding a bit more to US company bonds.

• Putting extra protection in place, including currency positions that benefit if the US dollar rises.

AXA

• Keeping a defensive stance.

• Holding more cash and government bonds, which are generally safer.

• Very little invested in the Middle East.

Schroders

• Reducing some equity exposure in China and Europe.

• Adding a little more to commodities, which can help when energy prices rise.

T. Rowe Price

• No big changes.

• Already held energy and defence companies, so they are well-positioned.

Barings

• Portfolios already focused on strong, stable companies.

• Their holdings should cope well if oil prices rise further.

10. What next?

The central question is: how long will disruption last?

If tensions cool, inflation pressures should ease and markets may stabilise. Until then, our portfolios remain diversified and actively managed to navigate uncertainty.

Investors should stay calm, stay diversified, and stay focused on long‑term objectives rather than short‑term headlines.

Issued by Omnis Investments Limited. This update reflects the views of Omnis at the time of writing and is subject to change. The document is for informational only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given.

Omnis Investments Limited is registered in England and Wales under registration number 10266077. Registered office: Auckland House, Lydiard Fields, Swindon, Wiltshire, SN5 8UB. Telephone 0370 608 2550