MEETING PURPOSE
Our investment team aim to meet every week to discuss the macro environment and how this could impact our current and future portfolio construction.
KEY TAKEAWAYS
- Geopolitical “Fire Alarm”: The Middle East conflict is the immediate concern. The market is pricing a short term resolution, but a prolonged conflict would cause a major equity sell-off, as it would disrupt oil/LNG supply, spike inflation, and halt rate cuts.
- Commodity rally turning into a short term correction: Energy prices are surging (Brent +10% in a week, Eurodiesel +20%), and industrial metals are extremely volatile. The rally was driven by supply-side constraints, not just geopolitical risk – a scenario which we believe will continue but with excessive price volatility in the short term.
- Unprecedented manager divergence: Underlying Fund Manager performance has diverged dramatically – especially in global funds/models. Orbis Global Balanced is up ~25% in USD terms over the past 6 months, while other SA Global managers in our portfolios are marginally in the money.
TOPICS
Geopolitical “Fire Alarm” and Market Impact
- Core Risk: A prolonged conflict in the Middle East
- Market Disconnect: Equities are pricing a short-term resolution at the time of writing*. A longer conflict would force a repricing, likely causing a major sell-off.
- Key Chokepoint: The Strait of Hormuz (25% of global oil trade). A full closure could spike oil prices 150% and raise recession risk to 50% at $120/bbl.
- LNG Vulnerability: Europe and Asia are highly dependent on LNG. The recent attack on Qatar’s refinery is a critical supply threat.
- Immediate Market Reactions
- Equities: Global indices are consolidating, not breaking down. The NASDAQ appears weakest.
- Safe Havens: A “flight to quality” is boosting the USD (DXY testing 99.20 resistance) and US Treasuries, despite rising US debt.
- SA Bonds: Weakened overnight on inflation fears, pausing the recent tightening trend.
Commodity Rally Driven by Supply Constraints
- Energy: Surging on geopolitical risk
- Brent crude: +10% in one week.
- Eurodiesel: +20% in two days.
- Industrial Metals: On the verge of a major bullish breakout, but extremely volatile at present.
- Supply-Side Rationale: Mine startup times have increased from ~12 to ~18 years, creating a slow supply response to rising demand in metals like Copper.
- Precious Metals:
- Gold: Bull market remains intact; new highs are likely.
- Platinum: Nearing a major bullish breakout, but downside volatility today*
- Palladium: Consolidating after a strong run.
*02.03.2026
Global markets continue to navigate a range of challenges and uncertainties, which can lead to understandable questions from clients. Encouragingly, the MitonOptimal portfolios remain well positioned and continue to perform in line with their strategic objectives, supported by disciplined portfolio construction and diversification.
If any of your clients would like to talk through current market conditions or simply seek reassurance around their portfolios, please feel free to reach out. We are always available to assist with discussions, provide context where helpful, and support you in keeping clients comfortable with their long-term investment strategy.
The content of this article is for information purposes only and does not constitute an offer or invitation to any person. The opinions expressed are subject to change and are not to be interpreted as investment advice. You should consult an adviser who will be able to provide appropriate advice that is based on your specific needs and circumstances. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable and given in good faith, but no representation is made as to their accuracy, completeness or correctness.3