​Over the past two weeks, the Iran war has entered a more intense yet increasingly fluid phase, characterised by sustained US–Israel airstrikes that have significantly degraded Iran’s missile and military infrastructure while leaving residual retaliatory capacity intact. More recently, however, the US has reportedly scaled back or suspended parts of its strike activity, coinciding with early-stage, indirect peace negotiations that are allegedly taking place, suggesting a potential tactical pause rather than a definitive de-escalation. At the same time, escalation risks remain elevated, with contingency planning for ground operations still on the table and ongoing proxy activity across the region reinforcing the threat of a broader multi-front confrontation. Strategic pressure on key infrastructure and maritime chokepoints persists, while conditions within Iran continue to deteriorate amid infrastructure damage and mounting humanitarian strain. Overall, the conflict appears to be transitioning from peak intensity towards a more uncertain phase balancing military pressure with tentative diplomatic engagement.

The current war with Iran began in late February 2026, when the United States and Israel launched a coordinated military campaign targeting Iran’s nuclear programme, missile infrastructure, and senior leadership. The opening phase of the conflict resembled a decapitation strategy, with early strikes reportedly aimed at eliminating key political and military decision-makers in order to disrupt Iran’s command structure and weaken the regime’s ability to coordinate a response. Following these initial attacks, the campaign transitioned into a broader air superiority and strategic degradation effort, involving sustained strikes against military installations, missile launch sites, and critical infrastructure across the country. Iran subsequently retaliated with ballistic missiles and drones targeting Israel and U.S. military assets across the region, turning the confrontation into a sustained exchange of strikes rather than a limited punitive operation. As regional actors and Iranian proxy forces became increasingly involved, the conflict has gradually regionalised into a wider Middle Eastern confrontation, raising concerns about broader geopolitical escalation and potential disruptions to energy markets and global trade routes.

​At the end of last week, the US Supreme Court delivered a major legal rebuke to executive trade policy, ruling that President Trump exceeded his authority by imposing sweeping global tariffs under the International Emergency Economic Powers Act (IEEPA). The Supreme Court finds that the statute did not authorize broad tariff powers and therefore invalidating large portions of his tariff regime. In response, President Trump immediately pivoted to alternative statutory authorities, including a temporary global tariff of 10% - later increased to 15 % - under Section 122 of the 1974 Trade Act. This announcement signals further industry- and country-specific tariffs under national-security provisions, keeping trade policy uncertainty elevated. The legal clash and policy recalibration have fed deep political polarization over trade and economic strategy. Consequently, public polling shows substantial opposition to the tariff agenda and debate within both parties over statutory authority, executive power and economic priorities. These issues contribute to amplifying uncertainty in business confidence and strategic investment planning. These political dynamics intersect with broader economic signals that have diverged across the US economy. Manufacturing data show pockets of strength while consumer and business confidence remain subdued, and labour-market resilience coexists with weakness in investment and real incomes, underscoring the uneven impact of policy shifts and structural pressures on growth. Against this backdrop, market participants have increasingly adopted the “Sell America” narrative, a term describing sustained selling pressure on USD-linked assets amid perceived policy risk, with reallocation toward foreign equities, FX and alternative stores of value. The later is further boosted by geopolitical uncertainty.

Japan moved into focus following the high-stakes re-election of the lower house – a vote that was seen as politically risky but ultimately stabilising. Pre-election uncertainty had raised concerns about fiscal discipline and the policy coordination with the Bank of Japan, triggering short-term volatility in both equities and the yen. However, the successful re-election delivered continuity, preserving the reform agenda centred on corporate governance improvements, shareholder returns and gradual structural adjustments. For foreign investors, the outcome reduced near-term political tail risk while maintaining policy predictability. With political clarity restored, focus is shifting back to earnings momentum, currency stability and valuation support, bringing renewed attention to the trajectory of the Nikkei 225 and broader global equities.
Equity markets experienced a sharp but ultimately contained bout of volatility over the past two weeks, driven primarily by earnings dispersion rather than a deterioration in the broader macro backdrop. The correction was most acute within high-multiple software names, where listed SaaS companies declined by 32% from recent highs, as shown in Figure 1. While weaker forward guidance, elongating enterprise sales cycles and moderating net revenue retention were important catalysts, a deeper structural concern also emerged. Advances in generative AI may render parts of the traditional SaaS stack partially obsolete. Investors increasingly question whether AI-native platforms – capable of automating workflows end-to-end – could compress pricing power, reduce seat-based revenue models, or disintermediate legacy application-layer providers altogether.