The first quarter of the year has offered an early reminder that markets rarely move in straight lines. After the extraordinary enthusiasm that carried investors through 2025, much of it centered on the promise of artificial intelligence, the new year has quickly reintroduced elements of uncertainty. The pace of AI adoption has left many wondering not just how transformative the technology may be, but also how disruptive its ripple effects might prove across industries and, perhaps, the labor market.
Meanwhile, private credit, one of the brightest stars of recent years, has begun to attract more critical attention. Rapid growth and abundant capital have a way of dulling discipline, and emerging signs of weaker underwriting are forcing investors to reassess both risk and reward in the space.
Then came a new geopolitical shock. The outbreak of hostilities in Iran shifted markets from rotation to retreat, igniting a sharp rise in oil prices and rekindling inflation concerns that had only recently subsided. The result has been a more cautious tone—one in which interest rates and energy prices have resumed their outsized influence over sentiment, and investors have adopted a distinctly risk off posture while waiting for the uncertainty to clear. Oil has spiked, reflecting one of the largest supply shocks on record; long-term US Treasury rates are now flirting with 4.5% amid the inflationary impulse of war; and equities have sold off in a natural reaction to the uncertain economic backdrop.
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Equities Extend Losing Streak as Iran Conflict Roils Markets