Webinar Summary: The Iran Conflict and its Impact on Financial Markets

Thank you for joining our recent webinar, “The Iran War and its Impact on Financial Markets,” held on April 2nd.

As the situation in the Middle East continues to evolve rapidly, we wanted to provide a concise summary of the key insights shared by our CIO, Rajat Sharma, and Investment Director, Jonathan Eldridge.

To watch the video recording, click here: https://vimeo.com/1179895436?share=copy&fl=sv&fe=ci

This post outlines our current market outlook, including:

• Conflict Scenarios: An analysis of the potential paths toward resolution or escalation and the corresponding impact on global oil prices.
• Market Performance: A review of how equities, bonds, and commodities have reacted over the past month.
• Portfolio Strategy: How VAR Capital is currently positioned—maintaining a conservative stance with a focus on high-quality, resilient assets.
• Actionable Opportunities: Insights into specific areas of interest, including UK Gilts, structured notes, and selective equity themes.

At VAR Capital, our priority remains cutting through the short-term noise to focus on long-term investment fundamentals. We are closely monitoring these developments to ensure your portfolio remains resilient.

If you have any questions regarding the summary or would like to discuss your specific positioning, please do not hesitate to reach out to your relationship manager.

Best regards,

The VAR Capital Team

This summary provides a detailed overview of the webinar hosted by VAR Capital on April 2, 2026, regarding the conflict in Iran and its implications for global financial markets.

Disclaimer:

This message is provided for information purposes and should not be construed as a solicitation or offer to buy or sell any securities or related financial instruments, nor does the information constitute advice or an expression of our view as to whether a particular financial product is appropriate for you. Please note that we do not provide any tax or legal advice and clients must seek their own tax advice independently.

VAR Capital is an independent financial services firm offering asset management, lending and family office services. It was founded by individuals with extensive experience from Banking, Asset Management and Family Offices. Based in Mayfair, London, VAR Capital Ltd is authorised and regulated by the Financial Conduct Authority (FCA).

Current State of the Conflict

As of early April, the war has been ongoing for approximately one month and is currently in a “slight deadlock”.

• Strait of Hormuz: Traffic is down over 90%, with only one vessel passing through on March 31 compared to the pre-war average of 30–40 daily.
• Infrastructure Attacks: Iran has targeted civilian infrastructure, including a desalination plant in Kuwait. This is a critical escalation, as Gulf countries rely on these plants for up to 90% of their drinking water.
• Diplomatic Outlook: President Trump has claimed Iran is seeking a ceasefire and anticipates the war may wind down within two to three weeks.

Future Scenarios & Oil Impact

The webinar outlined four primary paths for the conflict and their effect on oil prices:

1. Best Case (Resolution): Both sides declare victory and the Strait of Hormuz reopens. Oil could drop to the mid-$80s, averting a global recession.
2. Partial Opening: Iran allows “friendly” or large countries (e.g., BRIC nations) to pass. Given that much of the region’s oil already bypasses the Strait via pipelines, this is considered a manageable scenario.
3. “Piracy” Model: Iran charges a toll (e.g., $2 million per vessel). This would only add about $0.50–$1.00 to the price of crude, though European nations might resist paying.
4. Worst Case (Escalation): Continued fighting and Red Sea disruption by Houthis could drive oil to $150–$200, almost certainly triggering a global recession.

Market Reactions to Date

• Equities: The MSCI World index fell approximately 9% at its lows, recovering slightly to finish the month down 7%.
• Commodities: Violent moves were seen in oil and European natural gas (the latter rallying 90%). Agriculture-related commodities like urea also spiked.
• Bonds: Bond prices fell (yields rose) as markets priced in an inflationary shock. In the U.S., expectations for 2026 rate cuts have dropped from 2.5 cuts to just a quarter of one.

VAR Capital Portfolio Positioning

VAR Capital entered 2026 with a conservative stance and has maintained that defensive posture:

• Equities: Portfolios are roughly 51% equities, focused on high-quality, resilient businesses. They have marginally increased exposure during recent dips but remain cautious due to the risk-reward ratio.
• Fixed Income: Focus is on high-quality, investment-grade bonds with a 4- to 4.5-year maturity. They are currently avoiding “risky” bonds or extending duration.
• Gold: Small positions were added, viewing gold as a necessary hedge against a potential “stagflationary” environment (low growth, high inflation).

Investment Opportunities Identified

• UK Gilts: For UK taxpayers, low-coupon gilts offer post-tax returns of circa 4.5% (equivalent to ~9% pre-tax), representing a very low-risk opportunity.
• Structured Notes: High volatility in commodities and equities has made structured products more attractive, with some yielding coupons of 10.5–11%.
• AI “Disintermediation” Stocks: Select software and credit rating agencies that fell due to AI fears—but are unlikely to be replaced by AI—are seen as 1- to 2-year recovery plays.
• Energy & Renewables: While energy equities face risks if oil hits $200 (due to demand destruction), oil services and renewable energy indices have shown structural strength.

Below is a summary of the specific yield and coupon data discussed during the webinar for your quick reference.

Fixed Income & Structured Product Opportunities

Asset Class Outlook & Volatility

• Gold: Viewed as a technical correction; recommended as a hedge for a stagflationary environment (low growth/high inflation).
• Silver: Not recommended as a safe haven; characterized by high volatility without long-term growth (“the poor brother of gold”).
• Commodities: Experiencing the highest volatility, particularly in oil and European natural gas (which rallied 90% in March).
• Equities: MSCI World finished March down 7%; VAR Capital is maintaining a neutral-to-conservative 51% exposure.

Here is a concise FAQ section based on the specific investor questions and expert responses from the webinar:

Investor FAQ: Sector Outlooks & Opportunities

Q: What is the outlook for the Energy sector given the current oil price volatility?
A: The “sweet spot” for energy equities is oil priced between $130–$150.

• Downside Risk: A ceasefire could drop oil to the mid-$80s, causing a correction in stocks. Conversely, if oil hits $200, a global recession and “demand destruction” would likely lead to a broad sell-off of all assets, including energy.
• Opportunity: Oil services have underperformed for a decade and may offer value if exploration increases. Additionally, renewables are seen as a structural opportunity to hedge against oil volatility.

Q: How are Far East and China sectors impacted by the conflict?
A: These markets are highly sensitive because they are massive net importers of energy (China imports ~70% of its demand). Rising prices have caused underperformance in China, Korea, Indonesia, and India. However, because these nations are allies of Iran, there is hope they may pressure Iran toward a resolution to protect their own economies.

Q: Which specific equity sectors are currently showing “interesting opportunities”?
A: We are focusing on two main areas:

1. Consumer Staples: Many high-quality names fell 10–15% in March due to technical selling by hedge funds, rather than poor fundamentals.
2. AI “Mispriced” Stocks: We are identifying software and credit rating firms that were oversold due to “AI disintermediation” fears but are expected to recover over the next 1–2 years.

Q: Is now the time to buy Silver alongside Gold?
A: No. While Gold is recommended as a technical hedge for stagflation, Silver is viewed as “the poor brother of gold.” It is not a safe haven and has historically shown high volatility without delivering long-term growth.

Q: In the case of worst-case scenario, at what point will we start cutting loses or create liquidity for future buy ins?

A: We have been modest buyers of equities in the initial weeks of the selloff. That being said, we don’t think equities are in “screaming buy” territory yet, and it was certainly the case in the initial selloff that bonds were pricing in a much more negative scenario than stocks certainly stickier inflation and perhaps some kind of attempt to price in stagflation. Clearly if we get stagflation, or if oil goes to $200/barrel then that changes things and we need to reassess. But what we’d say is that , at the risk of sounding glib, markets tend to get preoccupied with a certain doomsday scenario and, more often than not, forget about it. Recent examples would include:

1) Liberation Day tariffs, which people feared were going to cause a global recession and were quickly forgotten about as markets made new highs

2) Bond and equity selloff in unison in 2022 on the back of rapid rate hikes to deal with inflation generated by supply chain issues. Inflation moved back and earnings proved to be quite resilient, and the fears were quickly forgotten about as markets made new highs

It’s important not to be dismissive of risks, but a very successful investor once said that you pay a very high price in the stock market for a cheery consensus. Creating liquidity for future buy ins when the outlook is a bit clearer runs the risk that equities are meaningfully higher by the time there’s more clarity

Q: Isn’t silver in demand for data centres and AI companies?

A: Yes – silver is in demand for data centres, probably more so than for gold due to its superior conductivity and lower price relative to gold. However, the move in silver probably has a quite significant speculative element (you can see that from the way it is generally acting like a risk asset), and if you want to play the data centre buildout and the AI mega theme, we think there are more efficient ways to play that than silver

Q: Read that one of the conditions is Iran has no sanctions. That will bring more oil & gas on scene?

A: Potentially. Important to remember in gas that the strikes that Iran made to the Ras Laffan LNG facility in Qatar mean that 20% of global LNG supply has been knocked out and it will take 3-5 years and a lot of capex to get that production back. There is no deal that Trump can make to get that capacity back – the facilities are destroyed and that damage will take time to fix.

As we understand it, the broad brush strokes of the deal conditions from both sides are:

1. US wants Iran to give up enriched uranium, commit to not enriching more uranium, accept limitations on size and range of ballistic missile arsenal, all conditions they have refused in the past
2. Iran wants war reparations and a commitment from the US to remove all military bases in the region. The latter in particular is a complete non-starter

Overall, for a deal to happen, there needs to be some compromise from both sides. Trump also appears not to have a clear plan for how to reopen the Strait of Hormuz beyond “it’s not our problem and other nations should help”. Clearly there will be the political will from other nations to help, particularly large net importers of energy such as China, so the bull case is that, as you say, more oil & gas comes onto the scene.

Q: How are you modelling potential regime shifts in cross-asset correlations? If correlations flip to positive, are you aggressively rotating into short-duration equity factors like deep value? Or are you relying on alternative beta and convexity?

A: Not really looking at convexity-type strategies at the moment. Guess it depends on the reasoning for the correlations to flip positive. Presume in this scenario you are saying that the mechanism is Iran creates a sticky inflationary shock, rates have to go up, bonds get hit hard and equities also perform poorly on the stagflationary-type scenario. In that case maybe you could look at deep value equities as, almost by definition, more of the cash flows arise in the early years, so as you say, there is lower duration built in.

However, there are other considerations. In a very inflationary environment, you would potentially want to own businesses with a lot of pricing power with the ability to pass on inflation to the end consumer – these companies tend to be higher up on the quality curve and thus not really in the value bucket. We are monitoring these types of things constantly and can be quite dynamic in the allocations that we make.

Q: How are airlines being affected?

A: Airlines have generally underperformed since the war broke out, with the key driver of that being rising jet fuel prices, which will eat into margins in the absence of ticket price increases. Of the major airlines listed on US and European exchanges, the median performance since the war started is -17%, with the worst performers being Alaska Air, Wizz Air, Air France-KLM, and EasyJet. A number of airlines have either cancelled flights (for instance BA, SAS), raised fares to offset jet fuel (Air France-KLM), or warned on profits for the coming year (Wizz Air announced that they expect a €50m hit to profits due to Middle East disruption).