Market drivers and catalysts
Equities: Global stocks fell as $100 oil hurt sentiment, with the U.S. and Europe weaker while Asia stayed cautious into Friday.
Volatility: Iran conflict, oil above $95–$100, VIX elevated near 27, inflation data ahead of FOMC
Digital Assets: Bitcoin above $71k, altcoins firmer, regulatory optimism supports sentiment
Fixed Income: US treasury yields continue to rise, as did Japan’s JGB yields Friday
Currencies: The US dollar remains a safe haven as it set new local highs against the EUR and JPY.
Commodities: Gold softened Thursday – concern for CB sales to fund oil purchases?
Macro events: Canada Feb. Employment Data, US Jan. PCE Inflation, US Mar. University of Michigan Sentiment
Macro headlines
- Iran's Supreme Leader Mojtaba Khamenei pledged to keep the Strait of Hormuz closed and threatened further conflict escalation. President Trump prioritized stopping Iran's nuclear ambitions over oil costs. The blockade has halted 20% of global oil trade, forcing GCC production cuts, although some 30% of Hormuz Strait normal flow rates could be rerouted through Saudi and UAE pipelines, with Saudi Arabia saying its pipeline could hit full capacity in coming days. The IEA labelled the disruption historic, prompting a 400 million barrel release from reserves.
- The US trade deficit fell to $54.5 billion in January 2026, from December's $72.9 billion, outpacing the forecast of $66.6 billion. Exports increased 5.5% to $302.1 billion, driven by gold, metals, and computers, while pharmaceuticals fell. Imports decreased 0.7% to $356.6 billion, with drops in pharmaceuticals and vehicles, but rose for computers and telecom equipment.
US housing starts rose 7.2% to an annualized 1.487 million rate, exceeding forecasts and marking three months of growth. Multi-family starts surged 29.1%, while single-family starts fell 2.8%. Construction increased in the South and Northeast, but declined in the West and Midwest.
Canada's trade deficit rose to C$3.6 billion in January 2026 from C$1.3 billion in December. Exports fell 4.7%, driven by drops in vehicles and aircraft, partially offset by higher energy exports. Imports declined 1.1%, mainly due to decreases in vehicles and electronics. The US surplus narrowed to C$5.4 billion, and the deficit with other countries expanded to C$9.0 billion.
US initial jobless claims fell 1,000 to 213,000 in early March, below expectations. Continuing claims fell by 21,000 to 1,850,000, indicating a stable labour market. Federal employee claims rose by 88 to 617, amid government shutdown concerns
Macro calendar highlights (times in GMT)
1000 – Eurozone Jan. Industrial Production
1230 – Canada Feb. Employment Data
1230 – US Jan. PCE Inflation
1230 – US Jan. Preliminary Durable Goods Orders
1400 – US Mar. Preliminary University of Michigan Sentiment
Earnings this week
Today: PKO Bank
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 fell 1.5% to 6,672.58, the Dow Jones dropped 1.6% to 46,677.85, and the Nasdaq Composite lost 1.8% to 22,311.98 as fresh tanker attacks and Iran’s vow to keep the Strait of Hormuz shut pushed Brent back to $100 and revived inflation fears. Financials took the hit, with Morgan Stanley down 4.1% after limiting redemptions at one private-credit fund and JPMorgan off 1.6% after marking down some private-credit loans. There were still a few odd winners in the rubble: Dow rose 9.3% and LyondellBasell gained 10.3% after a Citigroup upgrade tied to export opportunities, while Adobe fell almost 8% after hours after announcing a CEO transition even though quarterly results beat estimates.
Europe: Europe stayed on the defensive, with the STOXX 600 down 0.6%, the Euro STOXX 50 lower by about 0.8%, and the FTSE 100 off 0.5% as oil’s return to $100 lifted inflation fears and pushed markets to price a European Central Bank rate hike by July. Banks were the weak spot, with the regional banking sector down 3.5% and UK banks down 4.8% as investors worried that higher energy costs could squeeze growth and credit quality. Not everything went south: Leonardo rose 5.7% on stronger growth targets, Daimler Truck added 4.1% on a steady margin outlook, and Zalando jumped 9.5% on firmer profit guidance. Markets now watch oil, bond yields and how fast rate-cut hopes keep evaporating.
Asia: Asia stayed under pressure on Friday, with the Nikkei 225 down 1.1%, the Kospi off 1.3%, the Hang Seng down 0.5% and Shanghai slipping 0.2% as oil hovered near $100, the dollar strengthened and investors trimmed rate-cut hopes again. Japan’s Honda dropped 6.7% after warning of its first annual loss in nearly 70 years as a listed company, driven by heavy electric-vehicle restructuring costs and weakness in China. In Hong Kong, financial names also remained nervous after the city’s insider-trading probe, with Guotai Junan International down 4.2% and Citic’s Hong Kong shares off 1.7% in the prior session. Next week’s central-bank meetings now matter even more, because holding rates steady may prove easier than calming oil markets.
Volatility
Volatility remains elevated as markets continue to digest the ongoing U.S.–Israel conflict with Iran, now entering its third week. Energy markets remain the key transmission channel into broader financial markets: Brent crude is still trading around $100 and WTI near $95, levels that keep inflation concerns alive and complicate expectations for interest-rate cuts. Reflecting that uncertainty, the VIX closed at 27.29 on Thursday, while shorter-term measures such as VIX1D (24.21) and VIX9D (28.98) remain elevated, showing investors are still paying up for near-term protection rather than assuming volatility will fade quickly.
Today’s macro calendar could add another layer of uncertainty. Markets will focus on Core PCE inflation, durable goods orders, and JOLTS job openings, all of which may influence expectations ahead of next week’s 17–18 March FOMC meeting. If inflation data remains firm while energy prices stay elevated, volatility could persist as investors reassess the outlook for monetary policy.
- Based on current SPX options pricing, the market is implying an expected move of roughly ±75 points for today’s expiry.
Looking at the options chain for today’s expiry, there is a mild downside skew, with puts around the current index level still priced slightly richer than equivalent calls. That pattern suggests investors remain cautious and continue to prioritize portfolio protection.
Digital Assets
Digital assets are showing relative resilience despite weaker equity markets and persistent geopolitical risk. Bitcoin is trading around $71,400, Ethereum near $2,100, Solana around $88.7, and XRP close to $1.42, with most major cryptocurrencies modestly higher on the day. The gains come as investors weigh geopolitical uncertainty against improving sentiment around U.S. crypto regulation. Earlier this week, the SEC and CFTC signaled closer cooperation on a joint regulatory framework for digital assets, a development that investors hope could provide clearer rules for the industry and encourage broader institutional participation.
ETF activity remains central to the crypto market narrative. The iShares Bitcoin Trust (IBIT) is trading around $39.95, while the iShares Ethereum Trust (ETHA) is near $15.63, continuing to act as key gateways for institutional exposure to bitcoin and ether. At the same time, crypto-linked equities show mixed performance: Coinbase (COIN) and MicroStrategy (MSTR) are slightly lower, while some bitcoin miners such as MARA are holding up better alongside the underlying crypto market. Overall, the crypto market appears to be stabilizing after recent volatility, but sentiment remains sensitive to macro developments such as energy prices, inflation expectations, and shifts in global risk appetite.
Fixed Income
US Treasury yields rose sharply Thursday on the fresh surge in energy prices, which are driving inflation concerns. The benchmark 2-year yield cleared the range since August above 3.67%, trading early Friday some eight basis points higher from Wednesday’s close at above 3.73% as the market has removed even more forward easing expectations from the Fed for 2026 over the last two days – now pricing less than a full cut for the balance of the year. The benchmark 10-year treasury yield closed three basis points higher at above 4.26%, with the smaller rise Thursday than at the front end of the treasury yield curve perhaps on anticipation that higher oil prices will slow forward growth. The range high since August is 4.307%.
Japan’s government bond yields rose and the yield curve steepened yesterday on the rise in energy prices, with the benchmark 2-year JGB yield rising two basis points Friday to a high since mid-February at nearly 1.29%, while the benchmark 10-year JGB yield rose nearly six basis points to just below 2.25%, near one-month high.
European bonds have seen a sharp repricing lower this week on anticipation that the ECB will respond to the inflation risks from higher energy prices with a rate hike as soon as June of this year. The benchmark German 2-year bund closed Thursday at 2.42%, its highest daily close since August of 2024 and up about 40 basis points from before the Iran War broke out.
Commodities
Oil remains the dominant force across commodity markets and a key driver of global risk sentiment, with May Brent closing above USD 100 per barrel Thursday for the first time since the Iran War broke out (even if there was a spike to nearly USD 120 per barrel briefly in early hours this Monday) and remaining near that level in Friday’s Asian trading hours as the market nervously awaits news that the Hormuz Strait, through which about 25% of global oil exports flow – and some Asian countries like Japan predominantly reliant on crude oil from the region. The US April WTI contract trades about five dollars lower at USD 95.30, with May WTI, which traders are now rolling into as the April contract liquidity dries up, trading near 94.20.
Precious metals dipped Thursday, with gold once again failing to sustain the price action above the USD 5,200 level and falling below 5,100. The question may arise at some point whether countries desperate for oil supplies could use central bank resources, including gold sales, to fund purchases.
Currencies
The US dollar remains the safe haven currency, on general weak risk sentiment Thursday, but also as the US relies very little on oil or gas supplies that normally flow through the Hormuz Strait. EURUSD dipped below 1.1500 in Asian trading hours Friday for the first time since November and is close to challenging the 1.1469 low from that month.
USDJPY slipped above 159.00 for the first time for this cycle adding to gains Friday in Asia as it traded as high as 159.69, the highest level since the summer of 2024 as the market nervously eyes the 160.00 level and whether this could bring Japanese official intervention to prevent further JPY weakness. The JPY firmed in non-USD crosses like EURJPY and GBPJPY.
