In the United States, markets were dominated last week by the conflict involving Iran, the US, and Israel. The pre-emptive strikes by the US and Israel led to a week of uncertainty across global markets, with equities bearing the brunt of the volatility. While many expected a deep sell off on Monday, the reaction was relatively muted and was supported by strong US manufacturing PMI data, which pointed to continued expansion in the country’s manufacturing sector. However, the more pronounced sell-off occurred on Tuesday, with both the S&P 500 and NASDAQ falling sharply. The S&P 500 dropped by as much as 2.40% during the session before recovering to close just under 1% lower. Investors rotated away from growth-oriented equities towards more value-based companies, with Target, the low-cost retailer, emerging as one of the best performers on the S&P 500 midweek. Markets continued their downward spiral on Thursday as oil prices continued to rise. There was however some optimism over the week after Iran announced a cessation of strikes on neighboring countries and apologizing to them. The broader uncertainty present in US markets so far in 2026 can also be observed in flows into equity ETFs. In February, record inflows were reported for equally weighted indices, with $5.9 billion moving into these strategies, while ETFs focused on the “Magnificent Seven” recorded significant outflows. This underscores heightened concerns surrounding the scale of the AI build-out, as well as increasing investor demand for value-oriented equity strategies. For the week, the S&P 500 and NASDAQ both closed lower, falling -1.42% and -0.60% respectively.
In corporate developments, while the world focused on the conflict in the Middle East, there were some corporate stories worth noting. Global Infrastructure Partners, which is owned by BlackRock, the world’s largest asset manager by assets under management, along with EQT, agreed last week to acquire AES Corporation. The deal will see BlackRock acquire one of the largest listed US utility companies. The transaction, which also involves capital from Qatar, highlights growing investor demand for power generation assets as the AI boom drives a surge in electricity demand. AES owns and operates power plants across the United States and in thirteen other countries. Notably, the company’s power portfolio consists of approximately 64% renewable energy facilities, with natural gas accounting for a further 23%. US electricity demand is expected to increase by around 25% by 2030, making the acquisition a vital strategic investment.
In technology, several of the industry’s largest companies agreed last week to bear the cost of new electricity generation required to power their expanding data centre infrastructure. Among those participating were Amazon, Meta, Alphabet, and Microsoft, which all signed the Ratepayer Protection Pledge, an initiative introduced by the Trump administration. While the agreement is viewed as positive for consumers, there remains some scepticism regarding how the initiative will function in practice.
In Europe, markets declined significantly last week due to the US–Iran conflict and concerns that higher oil and gas prices could push inflation higher across the bloc. Natural gas prices remained a key issue, with EU prices per megawatt hour (MWh) rising to three-year highs on Tuesday — the highest levels seen since the Russian War in Ukraine. These developments weighed on banking and travel stocks, while industrial companies also declined as oil prices continued to rise. However, although the sell-off was particularly pronounced on Tuesday, markets stabilised somewhat later in the week as reports emerged that Iran had initiated contact with US-linked officials regarding a potential cessation of hostilities and a possible renewal of negotiations over the country’s nuclear programme. In addition, Asian markets stabilised on Thursday, which helped support broader global sentiment. For the week, the Euro Stoxx 50 and STOXX 600 closed down -5.03% and -4.27% respectively.
In the United Kingdom, the FTSE 100 also declined last week, suffering heavy losses as some of the index’s key sectors underperformed. Some of the worst-performing sectors were travel stocks, including IAG and easyJet, and mining stocks. However, the index received some slight support from the oil sector, with BP and Shell rising early in the week before gradually retreating to pre-conflict levels. For the week, the FTSE 100 closed -5.33% lower.
In corporate developments, in a unique development, Iceland — the British supermarket chain originally known for specialising in frozen food — reached a settlement with Iceland, the country, over a long-running trademark dispute concerning the name “Iceland”. While the country never sought to force the supermarket to change its name, it did challenge the retailer’s attempt to trademark the word “Iceland” across Europe. This led to a decade-long legal dispute, culminating in a 2019 ruling by the EU Intellectual Property Office stating that the supermarket could not trademark “the name of a country that has existed since the 9th century.”
