This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. EM Fixed Income: Will EM markets keep trading Iran conflict de-escalation?
- Discussion on implications of potential ceasefire on different parts of EM asset class
- Relief rally seen in EM currencies, credit, and local rates following announcement of two-week ceasefire
- Potential for negotiated off ramp and lower risk of recession for global economy if ceasefire holds
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2. UK Burns Bridges to FDI
- The UK’s defence of its Gulf allies was weak (i.e. only 4 Typhoons in Qatar) and failed in Cyprus, where EU states did more and quicker, devaluing UK security guarantees.
- Without reliable ballistic missile defences or a functioning nuclear deterrent, the UK relies more on the US, yet Starmer punishes allies and energy bill payers to snub Trump.
- FDI from the Gulf (e.g. Qatar £40bn+) should partially unwind, just as the UK’s security promises did, feeding a structural underperformance of UK assets, including Sterling.
3. UK Q1 Residual Seasonality Returns
- Resurgent GDP in February, after an upwardly revised January, doubles tracking estimates of Q1 growth to 0.6% q-o-q. But this is merely a return of residual seasonality.
- We still expect growth to be heavily frontloaded into Q1 with stagnation through H2, but the initial real income squeeze is likely to stall Q2 more than usual.
- The biased BoE responds asymmetrically. It will likely discount Q1 as spurious rather than hike, yet still see subsequent weakness as a cause for caution, keeping it on hold.
4. HEW: Rallying into the Void
- No news was good enough news for risk assets to keep rallying, but even a benign end to the US-Iran war will not negate the inflation shock lifting policy rates.
- EA inflation recovered some of its downside surprise in its final March print, but the UK’s international stature can’t recover. It failed to defend its investing allies.
- Next week is packed with news for the UK, where the rise in its inflation data is our highlight, with its labour market and global flash PMIs other notable releases.
5. FOOD FOR THOUGHT: Commodity War Scars and Coming Inflation
- Agricultural commodity prices have been tame so far, but rising fertilizer, energy, and transportation costs portend coming inflation. Farming margins are getting squeezed as costs rise and grain prices stagnate.
- Closure of the Strait of Hormuz has led to a surge in fertilizer prices, heating oil, and diesel, all of which will eventually bleed into food price inflation.
- Europe and Asia have maintained ample grain inventories, which have kept prices low since the war began; these are only temporary buffers.
6. EA: HICP and Politicians Energised
- EA inflation was revised up by 3bps, rounding to 2.6% and partly reversing the downside flash surprise. Surging auto fuel drives inflation, with broader pressures still to transmit.
- Politicians are attempting to moderate the shock, with a current focus on auto fuel, usually with tax cuts. Some energy utility measures are taken, but more will follow.
- Underlying pressures were more benign than the headline surge, depriving the ECB of evidence to support a rate hike yet. We still expect that to come in June instead.
7. BUY/SELL/HOLD: Hong Kong Market Update (4/14/26)
- The Hong Kong market joined other Asian markets during the post-war sell-off. The HSI easily held its long-term support levels, and the overall market breadth remains above 60.
- The materials sector has lost momentum as the energy sector emerged as the standout winner in the first quarter of 2026. Value and dividend yield factors continue to outperform.
- Xinjiang Goldwind Science & Technology (2208 HK) has been upgraded by JP Morgan, along with a target price rise from DBS. The company is experiencing a surge in international orders.
8. 257: Beyond The Magnificent Seven: Discovering Equity Opportunities in The S&P 493
- Historic concentration in the S&P 500 due to the dominance of tech and AI adjacent companies
- Top 10 stocks currently make up 40% of the index, the most concentrated period in history
- Opportunity to look beyond the “Magnificent Seven” and consider underexposed, innovative companies in the index
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9. Asia Economics: Damage from Iran Crisis Now Baked In
- The failure of the first round of US-Iran negotiations reflects the substantial difficulties that lie in the way of bridging the structural gap between the two sides.
- Even if further talks eventually produce a settlement, energy prices will not revert to pre-crisis levels given the damage to oil production. Risk premiums will also remain elevated as well.
- Asian economies face a double hit: domestic demand destruction through higher energy costs triggering public and private austerity, compounded by a looming trade slowdown.
10. Asian Equities: Higher Earnings Estimates, Lower Stock Prices – Nine Notable Sectors
- The resilience of Asian earnings is surprising. Consensus 2026 EPS estimate of Asia-ex-Japan (Factset Market Index) is up 3% over the past month and 10% over the past 3 months.
- 29 market-sectors have had robust upgrades over 1-month, 3-month and 6-month timeframes. Energy and basic materials and the prominent AI beneficiaries, Korean and Taiwanese tech, figure prominently among earnings gainers.
- Among the earnings winners, nine sectors have declined significantly since the beginning of the war. The HK/Chinese, Korean and Indonesian basic materials and Korean financials and Thai communications stand out.
