• US employment figures released on 6^th March were significantly worse than expected.¹
• China official growth targets were much lower than usual at 4.5% to 5% – helping to push China closer to its long-term geopolitical adversary India in a mission to find growth.²
• The best performing sectors from 2025 have become the worst performers during this period of volatility, and vice versa.³

A brief reminder

The news this week has been dominated by the ongoing hostilities in the Middle East. As a brief reminder, the investment ramifications of the Iran conflict centre around the impact on oil prices. Iran is able to constrict oil supply by choking off the Strait of Hormuz, where 25% of global seaborne oil shipments and c.20% of liquid natural gas flows⁴.

The chart below, from derivatives marketplace CME Group⁵, shows the volume of futures being traded on oil (left vertical axis) and how the volume has tripled since 2^nd March, leading to huge price swings in the market.

The world is still turning

For better or worse the world continues to turn whilst these events unfold, and our job is to filter out the noise and focus on where the long-term implications lie. Particularly this week there have been many other announcements that have been lost in the Iran-conflict noise.

For instance, on Friday 6th March, the US posted a significant, unexpected deterioration in its labour market. Non-farm payrolls for February fell by 92,000, one of the largest declines since the pandemic, compared to an expected 55,000 rise. As a result, the unemployment rate posted a surprise rise to 4.4% (from 4.3%)⁶. Revisions to previous data also revealed that payrolls fell in December 2025. This might not be isolated to just the US, as Volkswagen announced this week its intention to cut 50,000 jobs in Germany by 2030⁷. Our focus here is on what this means for interest rates. A weak employment market typically encourages more interest rate cuts. The key issue to understand is how many of those cuts are cancelled when inflation rises due an oil price shock?

For now, US inflation remains stable, as the latest reading highlighted on 11th March⁸. The Consumer Price Index, excluding food and energy, was unchanged at 2.5% from a year ago, the slowest pace in nearly five years. However, higher energy prices won’t yet have fed into those numbers.

In other news, China, which in recent decades has been the growth engine of the world, set its 2026 economic growth target at 4.5% to 5%, its lowest target since 1991⁹. The announcement reflects the ongoing economic pressures within the country from tariffs, weak consumer demand and low levels of investment. A partial remedy for these economic woes might be the announcement that India is easing rules that will allow Chinese investments into the country, helping to reset economic ties with China after nearly six years of friction¹⁰. This strategy will be a way for companies to diversify production away from China into India, avoiding US tariffs, whilst still maintaining access to their Chinese supply chains and cheap components.

Bowmore portfolios

The chart below, from data provider AlphaTerminal, shows a sample of fund sectors and their performance since the Iran/US conflict began. The dispersion is wide and shows Japan, Asia and Global Emerging Markets as the worst performers, with UK Gilts, North American equities and Infrastructure as the best performers.

The chart below, again from AlphaTerminal, shows the same indices over 2025. Broadly speaking the ones with the most muted performance in 2025; UK Gilts, North American equities, and infrastructure, have been the best performers during this Iran/US conflict. Conversely the stronger performers, Japan, Asia and Global Emerging Markets are nursing the steeper losses in 2026.

This highlights how excitement often unwinds rapidly and that intentional diversification is rewarded.

We have meaningful exposure to Gilts and North American equities within our portfolios. In particular our global technology fund is slightly positive since 2nd March and our short-dated Gilt and UK corporate bond funds are broadly flat, displaying the defensive characteristics we would expect from short, dated bonds.

Avoiding knee-jerk reactions at times like this is important; the Japanese index fell by 5.2% on 9th March yet rose by 2.9% the following day, showing how intense volatility has been and therefore how harshly it can punish investors trying to second guess developments.

Our regular asset-class performance chart below is particularly striking this week given the standout oil price moves over the last month due to the Iran/US conflict.

Source: AlphaTerminal, data as at 13/03/2026

The value of your investments can go down as well as up, so you could get back less than you invested. Past performance is not a guide to future performance.

Sources:

1. Surprise Drop in US Payrolls Casts Doubt on Steadying Job Market – Bloomberg
2. China dials down growth ambitions with decades-low target. Here’s why
3. AlphaTerminal
4. Conflict and commodities – Bowmore Asset Management
5. Crude Oil Futures Volume & Open Interest – CME Group
6. Surprise Drop in US Payrolls Casts Doubt on Steadying Job Market – Bloomberg
7. Volkswagen to cut 50,000 jobs as profits drop – BBC News
8. US CPI: Core Inflation Slows in February as Expected Before Iran War – Bloomberg
9. China dials down growth ambitions with decades-low target. Here’s why
10. India-China reset? Relaxed rules allow Beijing to invest in India after about six years of friction