Caxton extends losses as Iran war slams markets

London based hedge fund Caxton Associates has extended its losses as the Middle Eastern conflict continues to impact global markets.

The fund’s losses rose by more than $1.3bn (£971.1m), with its $9bn macro fund, which is run by chief executive Andrew Law, is down 15 per cent this month to 20 March, according to two people who had seen the numbers.

First reported by the Financial Times, the losses make Caxton one of the highest profile hedge funds to suffer losses since the Iran war began earlier this month and shattered bond and equity markets, in particular energy stocks.

The fund lost $600m in the first week of March.

Fleeing bonds and gold

Traders have ditched government debt, anticipating that soaring oil and gas prices will hike inflation, forcing central banks to lift interest rates.

Brent crude broke $100 per barrel earlier this month, sending markets across the globe spiralling, and is now hovering around $95.2, after Trump said the US had entered peace talks with Iran.

The price has soared 35.5 per cent over the past four weeks, in the wake of Iran closing the Strait of Hormuz, cutting off the waterway which is responsible for transporting a fifth of the world’s oil supply.

Elsewhere, the movement in bonds has hit hedge funds that were positioned for rate cuts or were betting that shorter-dated bonds will ultimately perform better than long-dated ones.

The gold price has also suffered, plummeting over 15 per cent since the war broke out, as investors cashed gains to offset losses from other investments.

Caxton profited from bets on gold and copper last year, with copper also down 7.6 per cent this month.

Navigating the conflict

Investors across assets and markets have been thrown into greater turmoil by the difficulty of navigating the conflict, off the back of continued and often unexpected social media posts and statements from Donald Trump.

Trump has made tweets regarding potential peace talks, U-turns and attacks on Iran which have left the market scrambling to allocate or protect their capital.

On Monday, Trump posted on Truth Social that there had been “productive conversations” with Iran to end the war, which caused Asian markets to claw back gains, spark a government bond rally and drop the price of oil.

The country has since received a 15 point plan from the US, including demands of the destruction of nuclear facilities, the reopening of the Strait of Hormuz and dismantling existing nuclear capabilities.

But Iran has claimed the US is “negotiating with itself”.