MTTM Podcast Episode 540 – Investment Market Update: Middle East tensions & platforms paying most interest on cash

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The Impact of Middle East Tensions on Global Markets

Summary:

We analyse the market reaction to the recent conflict in the Middle East. While some predicted a total market collapse, the reality has been a complex shift in asset correlations. We discuss the unexpected slump in gold, the resilience of the FTSE 100 due to its lack of tech exposure, and the sudden return of the US Dollar as a "haven" asset. We also explain the risk of stagflation - a combination of rising inflation driven by energy costs and stagnant economic growth - and how this mirrors the market conditions seen in 2022

Key Insights:

• The US Dollar is the pivot - The US Dollar Index (DXY) is the most important chart to watch right now. A break above the 100 level could signal continued weakness for gold and emerging markets.
• Gold isn't always a safe haven - During extreme volatility, investors often sell their most liquid and profitable assets, like gold, to cover losses in leveraged positions elsewhere, such as tech stocks.
• Energy-driven inflation - Because the US is a net exporter of energy, a rising oil price strengthens the dollar while putting downward pressure on the currencies of energy-importing nations in Europe and Asia.
• The threat of stagflation - Rising energy costs could force central banks to delay interest rate cuts, leading to a "hawkish" environment where both bonds and equities fall in tandem.

 

Investment platforms paying interest on your uninvested cash 

Summary:

As ISA season approaches, many investors are moving money into accounts but may be hesitant to buy into volatile markets immediately. We explain how you can earn a competitive return on cash that is sitting uninvested within your Stocks and Shares ISA or SIPP. We compare the different interest rate structures used by major UK platforms and also highlight the importance of checking the small print regarding money market funds and "bonus" rates.

Key Insights:

• Flat vs Tiered vs Capped - Platforms use different models; Some pay a flat rate regardless of your balance, some use tiers where the rate rises as you hold more money and some cap the rate meaning you only earn interest on a selected amount.
• Top rates available - Current market leaders like AJ Bell Dodl who are offering 3.8% (as of 06.03.26) on uninvested cash, which is significantly higher than some traditional high-street bank accounts.
• SIPP vs ISA rates - Many providers pay a higher rate of interest on cash held within a pension (SIPP) than in an ISA
• Is it true cash? -  Some platforms, such as Trading 212, pay interest via money market funds rather than traditional cash deposits. While low-risk, these are not the same as cash and carry different protections.
• Beware of short-term bonuses - Some providers, especially those offering market-leading Cash ISA rates, use 3, 6 or 12-month bonus rates to lure customers. Ensure you know how long the bonus is paid for, so you are able to compare rates effectively, and also make a note of when these expire to avoid falling onto a much lower underlying rate.

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