BACK
First Quarter Review: The first quarter of 2026 highlighted the value of diversification as markets reacted to growing geopolitical tensions. The S&P 500 declined 4.4%, while small-cap stocks posted modest gains and international markets slipped. Bonds were largely unchanged, but gold and commodities performed well, with commodities surging more than 24%. Market sentiment shifted sharply after the conflict between the U.S., Israel, and Iran escalated, driving increased volatility and pushing investors toward energy and value-oriented investments. Against a backdrop of elevated economic policy uncertainty, the commentary emphasizes maintaining diversified portfolios, focusing on each client’s long-term goals, and investing with conviction rather than reacting to daily headlines.
The Strait of Hormuz: The conflict with Iran has brought renewed attention to the Strait of Hormuz, a critical shipping route responsible for transporting roughly 20% of the world’s oil and liquefied natural gas. Disruptions to shipping have driven oil prices from under $67 per barrel at the end of February to more than $100 by the end of March, raising concerns about inflation across fuel, transportation, manufacturing, chemicals, and even semiconductor production due to helium shortages. The commentary notes that even a relatively quick reopening of the shipping lane would not immediately resolve supply chain disruptions, and sustained closures could significantly reduce global economic growth while keeping inflationary pressures elevated.
Other Factors We Are Following: Beyond geopolitical developments, Staley Capital is closely monitoring several key themes. The firm will be watching corporate earnings for signs of supply chain challenges and pricing pressure, while also tracking inflation data and Federal Reserve policy for clues about future interest rate decisions. Large anticipated IPOs from companies including SpaceX, OpenAI, and Anthropic could influence the technology sector, while growing stress within the private credit market may create refinancing challenges for highly leveraged businesses and institutional investors. Although the banking system remains well-capitalized, the firm expects markets to remain dynamic and reiterates its commitment to helping clients navigate an uncertain investment environment with a disciplined, long-term approach.