How Will Global Markets Weather Rising Tensions and Trade Shifts?

The global economy is facing a complex web of challenges, from rising tensions between the US and Iran to significant shifts in the solar industry and reassessments of Africa's debt risk. As these developments unfold, investors and policymakers are left wondering how global markets will weather the storm.

The escalating tensions between the US and Iran have already had a significant impact on oil prices, which have surged to a six-month high. Oil traders are watching closely for any further escalation that could disrupt crude production in Iran or prompt its government to block the critical Strait of Hormuz shipping route, used by several major energy exporters in the region. According to industry analysts, a prolonged disruption to oil supplies could have far-reaching consequences for the global economy.

Meanwhile, in the solar industry, Chinese polysilicon giant Tongwei Co. has announced plans to buy a smaller domestic rival, as the industry bids to shrink the chronic oversupply of solar-panel material. This move is seen as a significant step towards consolidation in the industry, which has been plagued by overcapacity and falling prices in recent years. Tongwei's bid is expected to help reduce the industry's reliance on government subsidies and pave the way for more sustainable growth.

In Africa, a Zambian Treasury official has called into question the perception of high debt risk on the continent, arguing that mispriced risk is costing Africa billions of dollars in additional debt-service payments and constraining critical economic growth. The official's comments come as Africa's debt burden has become a growing concern, with many countries struggling to service their debt obligations. However, some experts argue that the risks are overstated and that Africa's debt landscape is more complex than often portrayed.

In India, foreign inflows into equities are set to surpass domestic institutional demand for the first time in 17 months, driven by signs of improving earnings momentum and easing valuations. This shift in investor sentiment is seen as a positive sign for the Indian economy, which has been facing challenges in recent years.

Finally, a record cargo gap in China has revealed widespread evasion of US tariffs, according to a report by Bloomberg. The gap between Chinese exports to the US and US imports from China has grown significantly, suggesting that many Chinese exporters are using creative accounting and mislabeling to avoid tariffs. This development has significant implications for global trade and the ongoing trade tensions between the US and China.

As these developments unfold, investors and policymakers are left to navigate a complex and rapidly changing global economic landscape. While some risks are evident, others are less clear-cut, and it remains to be seen how global markets will respond to these challenges in the coming months.

Sources:
- "What's at Stake for Oil If Iran-US Tensions Escalate"
- "China's Tongwei Bids to Buy Rival and Hasten Solar Consolidation"
- "Africa Debt Risk Perceptions 'Overblown,' Zambian Official Says"
- "Global Funds Beat Local Buyers of Indian Stocks After 17 Months"
- "China Cargo Gap Shows Record US Tariff Evasion | The Asia Trade 2/25/2026"