Market drivers and catalysts
Equities: Oil-driven inflation fears hit the U.S. and Europe, while Asia also fell as energy risks and rate worries tightened sentiment
Volatility: Middle East conflict, oil above $100, inflation concerns, central-bank week ahead
Digital Assets: Bitcoin near $74k, short-liquidation rebound, IBIT and ETHA inflows supportive
Fixed Income: Long European yields saw highest weekly close since 2011.
Currencies: Euro broadly week, JPY firms on verbal intervention, AUD firms ahead of possible RBA rate hike
Commodities: Crude rises on tightening supply outlook, precious metals pressured by profit-taking and stronger dollar
Macro events: US March Empire Manufacturing & Feb Industrial Production, RBA Meeting early Tue.
Macro headlines
US strikes hit Kharg Island as war in Iran continues. Trump warned Iran's energy infrastructure could be targeted if the Strait of Hormuz stays closed. While traders await a US-led coalition to escort ships, the IEA said oil from a record reserve release will soon reach Asia.
President Donald Trump said he is “demanding” that other countries contribute to the defense of Strait of Hormuz as it remains effectively closed to oil tankers. In an interview with the Financial Times, Trump said he could delay his planned summit with Chinese President Xi Jinping if Beijing doesn’t help unblock strait. He also warned in that interview that NATO would face a “very bad” future if member states fail to help in Hormuz.
The University of Michigan Consumer Sentiment Index dropped to 55.5 in March 2026 due to the US-Iran conflict and rising gas prices, marking a three-month low. Nationwide personal finance expectations fell 7.5%, while inflation expectations held at 3.4%.
US GDP grew an annualised 0.7% in Q4 2025, revised down from 1.4% and the weakest since Q1’s contraction, amid lower exports, consumption, government spending and investment, while imports fell by less than first estimated.
China's economy rebounded in early 2026 with a surprising uptick in domestic consumption and investment, but this acceleration may be hard to sustain due to the war in Iran. Industrial output climbed 6.3% in January-February from a year earlier, while retail sales rose 2.8% and fixed-asset investment expanded 1.8%, with infrastructure investment surging 11.4%.
Macro calendar highlights (times in GMT)
1230 – US March Empire Manufacturing
1230 – Canada Feb. CPI
1315 – US Feb Industrial Production
1400 – US Mar. NAHB Housing Market Index
0330 – Australia RBA Cash Target announcement
Earnings this week
Tuesday: Alimentation Couche-Tard, Hon Hai Precision, Lululemon, Docusign, Oklo
Wednesday: Micron
Thursday: Accenture, Enel, Fedex, Darden Restaurants
Friday: Carnival
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 fell 0.6%, the Dow Jones dropped 0.3%, and the Nasdaq Composite lost 0.9% as oil hovered around $100 and the Iran conflict kept stagflation worries alive. Treasury yields rose even after U.S. fourth-quarter GDP was revised down, which was not the comforting mix equity bulls had in mind. Adobe sank 7.6% after its CEO said he would step down, reviving doubts about its AI strategy, while Meta fell 3.8% after a report said it delayed its new “Avocado” model. Ulta Beauty dropped 14.0% on a softer growth outlook, leaving markets heading into the Fed meeting with nerves still frayed.
Europe: Europe closed lower, with the STOXX 600 down 0.5%, the Euro STOXX 50 off 0.6%, and the FTSE 100 down 0.4% as investors priced in a nastier mix of higher energy costs and firmer rate expectations. Banks, miners and industrials stayed under pressure while bond yields pushed higher on fears the oil shock could feed inflation faster than growth. Even so, there were pockets of life: BE Semiconductor jumped 5.6% on takeover interest and Zalando rose about 7.0% after a broker upgrade, while Berkeley Group slipped 1.5% after warning that geopolitical risks were clouding the outlook. Markets now turn to whether oil pressure starts showing up more clearly in upcoming inflation expectations and ECB messaging.
Asia: Asia ended weaker, with Hong Kong’s Hang Seng down 1.0%, Japan’s Nikkei 225 falling 1.2%, and the Topix losing 0.6% as high oil prices, softer Wall Street leads and renewed inflation worries hit risk appetite. In Japan, Bank of Japan Governor Kazuo Ueda warned that yen weakness could worsen imported inflation, adding another layer of policy uncertainty just as growth-sensitive names were already wobbling. Honda tumbled 5.6% after warning of its first annual loss in nearly 70 years as a listed company, while SoftBank Group fell 4.5%, Advantest dropped 3.5%, and Tokyo Electron lost 3.6% as tech and cyclical shares stayed under pressure. The region starts the new week watching oil, currencies and central banks more than heroics.
Volatility
Market volatility remains elevated at the start of the week as investors continue to assess the third week of conflict involving Israel, the United States and Iran, with energy markets still acting as the main transmission channel into broader financial markets. Oil prices remain high — with Brent trading above $100 and U.S. crude near $95 — reinforcing concerns that the conflict could keep inflation pressures elevated just as global growth shows signs of slowing. This combination tends to make investors more cautious toward risk assets and keeps markets sensitive to geopolitical headlines.
At the same time, markets are entering a busy macro week, with central-bank decisions from the Federal Reserve, the European Central Bank and the Bank of England scheduled over the coming days. With energy prices rising and inflation expectations potentially shifting, investors will closely watch whether policymakers acknowledge the stagflation risks created by the oil shock.
The volatility backdrop reflects this uncertainty. The VIX closed Friday at 27.19, while short-term volatility measures remain elevated with VIX1D at 30.24 and VIX9D at 28.00, signalling expectations for continued headline-driven swings in the near term. Tail-risk indicators remain firm as well, with VVIX at 131.05 and SKEW at 137.76, suggesting investors are still willing to pay for downside protection.
Expected move: based on S&P 500 options pricing, markets imply a move of about ±191 points, or roughly 2.9%, for the S&P 500 into this Friday’s 20 March expiry. For today’s expiration, options pricing still shows a mild downside skew, with near-the-money puts trading slightly richer than calls, indicating investors remain more focused on protecting portfolios against further declines than positioning aggressively for upside.
Digital Assets
Digital assets started the week on firmer footing than equities, with Bitcoin trading around $73,889, Ether near $2,268, Solana around $93.6, and XRP near $1.48 based on the latest market snapshot. Bitcoin briefly traded above $74,000, its highest level in roughly six weeks, helped by a wave of short liquidations that forced bearish traders to close positions and amplified the move higher.
Investor demand through exchange-traded funds also continues to support sentiment. On 13 March, U.S. spot Bitcoin ETFs saw net inflows of about $180 million, including roughly $143 million into BlackRock’s IBIT, while spot Ethereum ETFs attracted about $27 million, with ETHA receiving around $32 million in inflows. This continued demand suggests that institutional investors are still using ETFs as their preferred way to gain exposure to crypto markets.
However, sentiment is not uniformly bullish. Options activity in crypto-linked equities such as Coinbase (COIN) and MicroStrategy (MSTR) showed increased short-dated downside protection late last week, indicating some investors are hedging against potential volatility. For now, the broader picture remains constructive, but digital assets are still closely tied to the macro environment: sustained oil price spikes, higher inflation expectations or a broader risk-off move in equities could still lead to renewed volatility across crypto markets and crypto-related stocks.
Fixed Income
Short-dated US Treasury yields pulled back Friday and in early trading Monday after the rush higher in yields on Thursday, with the benchmark 2-year yield at 3.71% in early trading Monday, two basis points lower from Friday’s close and relative to the multi-month high above 3.76% last week. The benchmark 10-year yield hit new cycle highs since January on Friday, rising almost to 4.29% before settling back to 4.26% in early trading Monday. The cycle high since last August was January’s 4.307% mark.
Japan’s government bond yield curve steepened Monday, with the benchmark 2-year JGB yield pulling back two basis points from its spike higher on Friday, trading above 1.28%, while the benchmark 10-year yield rose slightly to a new local high since early February and above 2.27%. The benchmark 30-year JGB yield rose more than three basis points to 3.565%.
European bonds remain under pressure, with short-dated bonds trading near the cycle highs while longer dated yields rose to new cycle highs. The benchmark 10-year German Bund yield, for example, closed Friday at 2.98%, up from 2.96% the prior day and at its highest level since October of 2023, and its highest daily close since 2011.
Commodities
An index tracking 26 major commodity futures is up 11% this month and 24% year-to-date, driven primarily by strong gains in crude oil and refined fuel products, which have surged around 40–50%. These gains have been partly offset by weakness in precious and industrial metals, led by copper and silver. Meanwhile, grains, soybeans, and sugar have received additional support from their biofuel and ethanol link to rising energy prices, as well as growing concerns about global food security.
Gold tumbled below USD 5,000 and silver below USD 80 in early Asian trading before staging a recovery to move back above those levels. Sentiment has been hurt by a stronger dollar, and investors rotating out of highly profitable positions following a year-long rally, while rising energy costs and inflation concerns have dampened expectations for rate cuts from the US Federal Reserve and other central banks. At the same time, the economic fallout from the war risks slowing global growth, weighing on metals that depend more heavily on industrial demand.
Brent crude trades around USD 105 following a highly volatile session as ongoing developments in the Middle East continue to drive sharp price swings. Some temporary relief emerged after a US strike on Iran’s Kharg Island, the country’s main crude export hub, appeared not to damage key energy infrastructure. Despite this, supply tightness remains the dominant theme, with the continued closure of the Strait of Hormuz posing the biggest threat to global energy flows. Only a reopening of the chokepoint is likely to prevent a deeper disruption to supplies of LNG, crude oil, refined fuel products, aluminium and other commodities. Crude futures have surged more than 40% this month, reflecting the scale of the supply shock following the effective shutdown of the Strait and Iran’s retaliatory attacks across the region.
Currencies
The US dollar remains the safe haven currency, but was mixed in Monday’s Asian hours on a modest comeback attempt in global risk sentiment. The euro is weak across the board, with EURUSD hitting a low of 1.1411 Friday, its lowest since the 1.1392 low of August of last year, only recovering toward 1.1450 in Asian trading hours Monday before dipping back lower.
AUDUSD fared somewhat better, managing to scratch back above 0.7000 and to 0.7015+ after closing Friday at 0.6981 – this ahead of a much anticipated RBA meeting Tuesday for which another 25-basis point rate hike is about two-thirds priced into the market.
The Japanese yen rebounded in the afternoon in Tokyo after significant rhetorical intervention from Japan’s Finance Minister, who said that authorities are ready to respond to currency market movements with bold steps if necessary. This reinforces the sense that 160.00 is a key line in the sand for USDJPY. The pair topped out 159.75 both Friday and in early trading Monday, trading 159.30 later in Monday’s session.
For a global look at markets – go to Inspiration.
