Market update | April 3rd, 2026

Geopolitics, inflation pressures, and crypto resilience: markets navigate rising uncertainty

The week was once again dominated by developments in the Gulf. Markets initially rallied strongly on hopes of an imminent resolution to the crisis—fuelled in part by the announcement of a televised address by Trump—only for those expectations to be disappointed, triggering a renewed rise in oil prices and fresh pressure on bond markets. Equity investors continue to price in a swift resolution, yet it is clearly in Iran’s interest to prolong the conflict, benefiting from toll revenues in the Strait of Hormuz and elevated oil prices. This dynamic raises the risk of a prolonged stalemate. Meanwhile, Gulf monarchies have begun discussing alternative pipeline routes to reduce reliance on the Strait, though such projects are costly and will take time.

Inflation fears and treasury selling complicate the policy outlook

Foreign central banks have accelerated their sales of US Treasuries, adding further strain to bond markets. The looming inflationary shock may constrain central banks’ ability to cut rates, yet it is also likely to dampen consumption and slow growth, making rate hikes less probable than markets have recently priced in. On the macro front, the ISM manufacturing index reached a four-year high, though this was largely driven by the “prices paid” component. Upcoming employment data will be closely watched following last month’s particularly weak report.

Crypto holds as quantum risks enter the spotlight

The crypto market, meanwhile, has shown resilience. Our internal sentiment index (see attached chart) has normalised significantly in recent weeks, far from the stress levels observed in February. Bitcoin’s variance is increasingly tied to global growth expectations, suggesting that a resolution in the Middle East could provide a meaningful boost. However, the week also saw the release of two research papers that materially bring forward the timeline for cryptocurrencies to become quantum-resistant. While the challenge is complex and progress in decentralised systems tends to be gradual, there remains sufficient time, and developer communities are taking the issue seriously. Notably, a researcher from the Ethereum Foundation co-authored one of the papers, underscoring the importance being placed on the topic.