Market drivers and catalysts
Equities: Stocks rebounded in the US and Europe as oil eased, while Asia split between stronger China data and Japan caution.
Volatility: Geopolitics + central banks, VIX easing but elevated, oil-driven inflation risk
Digital Assets: Crypto consolidates, ETF inflows supportive, IBIT/ETHA strong, options flow defensive
Fixed Income: Global yields fall back on risk sentiment recover Monday, but US high yield corporate bonds still under pressure
Currencies: US dollar strength eases. Muted AUD strength on split RBA decision to hike rates Tuesday
Commodities: Crude lifted by Iraq infrastructure attacks; gold steady, wheat up on drought concerns, soy pressured by China meeting delay
Macro events: Germany Mar. ZEW Survey, US Weekly ADP Employment Change, US Treasury to auction 20-year notes
Macro headlines
Australia’s Reserve Bank hiked the policy rate 25 basis points as most expected, taking the cash rate to 4.10%, but the decision was a narrow one with a 5-4 vote as the large minority voted to stand pat. Short Australian yields were choppy but almost unchanged by late trading in Australia, while the AUD strengthened modestly. The policy statement lifted concerns that inflation would remain above the bank’s target for longer than previously anticipated, though Governor Bullock was somewhat cautious, saying that the two consecutive recent hikes do not indicate that the bank is on a predetermined forward path.
Fears of a prolonged Strait of Hormuz closure remains despite some tankers from Iran-friendly nations being allowed to navigate the chokepoint. However, renewed Iranian attacks on energy infrastructure across the region dampened hopes with Brent hovering near USD 105 with tight supply starting to impact consumers, especially in Asia where gasoline, jet fuel, and diesel trades near a high for this cycle.
Canada's inflation rate dropped to 1.8% in February 2026 from 2.3% in January, the lowest since July. The decline followed the end of tax breaks, slowing food inflation to 5.3%. Price growth eased for various sectors, and BoC's core rates hit a four-year low of 2.3%.
US industrial production rose 0.2% in February 2026, surpassing the 0.1% forecast. Manufacturing output increased 0.2%, and mining rose 0.8%, while utilities fell 0.6%. Capacity utilization remained at 76.3%, below the long-term average.
Macro calendar highlights (times in GMT)
1000 – Germany Feb. ZEW Survey
1215 – US Weekly ADP Payroll Changes for four weeks through Feb 28
1400 – US Feb. Pending Home Sales
1700 – US Treasury to auction 20-year notes
2350 – Japan Feb. Trade Balance
Earnings this week
Today: Alimentation Couche-Tard, Hon Hai Precision, Lululemon, Docusign, Oklo, Tencent Music Entertainment
Wednesday: Micron, Jabil, General Mills, Macy's
Thursday: Accenture, Enel, Fedex, Darden Restaurants, Alibaba Group, Accenture, FedEx, PlanetLabs
Friday: Carnival, Xpeng
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 rose 1.0% to 6,699.38, the Dow added 0.8% to 46,946.41, and the Nasdaq gained 1.2% to 22,374.18 as oil pulled back and investors returned to the artificial intelligence trade. Relief on the Strait of Hormuz mattered, but the session also had a clear tech spine: Nvidia climbed 1.6% after Jensen Huang used GTC to unveil new products and sketch a larger artificial intelligence revenue runway, Micron rose 3.7% after announcing a new Taiwan facility, and Meta added 2.3% on reports it could cut roughly 20% of its workforce to help fund artificial intelligence infrastructure. Focus now shifts to the Federal Reserve.
Europe: Europe bounced, though with less drama than Wall Street. The STOXX 600 rose 0.4% to 598.47, the Euro STOXX 50 gained 0.4% to 5,739.01, and the FTSE 100 added 0.6% to 10,317.69 as retreating oil prices eased some inflation fear ahead of a busy week for central banks. Corporate moves did more of the heavy lifting: Commerzbank jumped 8.6% after UniCredit launched a fresh move to lift its stake, while GN Store Nord surged 21.2% after agreeing to sell its hearing business to Amplifon. Amplifon, for its part, fell sharply as investors worried about the price tag. Markets now wait for signals from the European Central Bank and Bank of England.
Asia: Asia told a more mixed story. Hong Kong led, with the Hang Seng up 1.5% to 25,834.02, while the CSI 300 edged up 0.1% to 4,671.56 and the Shanghai Composite slipped 0.3% to 4,084.79. Japan lagged, with the Nikkei 225 down 0.1% to 53,751.15, as stronger China activity data helped sentiment but did not fully cancel out energy and policy caution. In Hong Kong, BYD surged 7.8% after reports its Brazil plant secured 100,000 export orders from Argentina and Mexico. Nio gained 5.0% and Xiaomi added 5.6%, joining the electric-vehicle rally as investors leaned back into China growth and export names. The next test is whether that optimism survives the Bank of Japan and Federal Reserve meetings.
Volatility
Volatility remains elevated but more contained, as markets balance geopolitical tensions with a heavy central bank week ahead. The ongoing U.S.–Israel–Iran conflict continues to dominate sentiment, with oil prices holding at elevated levels (Brent above $100, WTI near $96), reinforcing concerns that inflation could stay persistent and delay rate cuts. At the same time, investors are focused on upcoming decisions from the Fed, ECB, BOJ and BOE, which could reshape expectations for growth and policy. The VIX closed at 23.51 (-13.5%), signalling some easing in immediate stress, while very short-term volatility dropped sharply (VIX1D 17.42, -42%), suggesting less near-term panic. However, SKEW remains elevated at 141.49, indicating continued demand for downside protection.
SPX expected move: options pricing implies a move of about ±129 points (1.92%) into Friday’s expiry, while today’s expected move is around ±53 points (0.79%). From today’s option chain, there is no strong downside skew, with pricing relatively balanced and slightly firmer on the call side, suggesting investors are not aggressively positioning for an immediate drop.
Digital Assets
Digital assets are consolidating after a recent rebound. Bitcoin trades around $74K (-1.2%), Ethereum near $2.3K (-1.7%), Solana around $94 (-2.4%), and XRP near $1.51 (-1.8%), reflecting a mild risk-off tone. Despite this, the broader structure remains constructive, supported by continued inflows into U.S. spot Bitcoin ETFs (around $199M on 16 March), which help stabilise prices during periods of volatility. BlackRock’s IBIT (+3.9%) and ETHA (+10.8%) both moved higher, highlighting ongoing investor interest, even as flows remain mixed in the short term.
Options positioning, however, remains cautious. Recent activity shows investors adding downside protection in crypto-linked equities such as COIN and MSTR, alongside short-dated hedging in IBIT, suggesting limited conviction in near-term upside. For investors, the key takeaway is that while long-term adoption trends remain supportive, short-term price direction is still closely tied to broader risk sentiment, particularly developments in oil markets and central bank policy.
Fixed Income
US Treasuries rallied as risk sentiment rebounded Monday and oil prices reversed from new local highs. The benchmark 2-year yield dropped more than three basis points, trading 3.68% while the benchmark 10-year yield fell more than four basis points to 4.23%.
Japan’s government bond yields eased slightly lower on calming risk sentiment with the benchmark 2-year and 10-year JGB yields less than a basis point lower near 1.28% and 2.27% respectively in late trading hours Tuesday in Tokyo.
European bonds rallied in line with global peers, with the benchmark German 2-year Schatz yield dropping back four basis points to 2.4% and the benchmark 10-year Bund three basis points lower at 2.95% after posting the highest daily and weekly close on Friday since 2011 just below 3.00%.
US high-yield corporate bonds remain under pressure after Friday’s jump wider in the yield spread versus US treasuries. The Bloomberg measure we track of high yield bond spreads versus treasuries widened another two basis points to 313 bps after a 13 point jump in the spread on Friday- It’s the widest spread since early June last year.
Commodities
Oil rebounded after Monday’s questionable 5% slide, a move largely confined to Atlantic basin benchmarks, while refined products—particularly in Asia—continued to signal a tightening market. Whereas Brent and WTI remain heavily influenced by speculative, headline-driven trading—some of which contributed to the earlier sell-off—the underlying physical market remains severely strained. Most refined products are still trading near the elevated levels seen during the initial phase of the attacks. Meanwhile, Iranian strikes on neighbouring energy infrastructure point to a potentially dangerous escalation, with the U.S. threatening retaliatory action against Iran’s export facilities on Kharg Island.
Gold holds above the 50-day moving average, last at USD 4.968, with investors increasingly questioning whether the metal is vulnerable to a deeper correction after failing in recent weeks to behave like a traditional safe haven. The long-term case for holding hard assets remains intact; however, rising inflation concerns—lifting long-end yields and supporting a stronger dollar—have created short-term headwinds, encouraging profit-taking following an extended period of strong gains. Silver’s relative outperformance may also come under pressure should a war-related weakening in industrial demand begin to weigh on the outlook.
Arabica coffee futures have stabilised after slumping to a July 2025 low at USD 2.75 per pound, following a five-month decline from a multi-year high near USD 4.40. Prices have faced sustained pressure after the mid-November removal of the additional 40% U.S. tariff on Brazilian coffee, alongside improving expectations for the 2026–27 production outlook. Current weather conditions point to the potential for a record harvest, reinforcing the softer price trend.
Wheat futures moved higher after a survey highlighted ongoing concerns about the condition of the U.S. winter crop in the drought-affected southern plains. In contrast, soybeans slumped from a near two-year high after President Trump signalled a delay in trade talks with China amid the escalating conflict with Iran.
Currencies
The US dollar weakened as risk sentiment rebounded strongly on Monday despite the ongoing uncertainty stemming from the Iran War. EURUSD pulled from the low 1.1400’s Monday to trade as high as 1.1525 late Monday before easing back just below 1.1500 in Tuesday’s Asian session, while USDJPY pulled back above 159.25 after a 158.85 low on Monday that was powered by a brief burst of JPY strength on verbal intervention from Japan’s finance minister.
The Aussie was broadly firm on a fresh RBA rate hike Tuesday that was largely priced into expectations ahead of the event. The reaction was somewhat muted in yield and currency terms by the scale of dissension as only a 5-4 majority on the RBA board voted in favour of the hike and the guidance was somewhat cautious. AUDUSD tested above 0.7090 at one point Tuesday after a 0.7072 close on Monday while AUDNZD jumped over half a percent to 1.2140, to new cycle- and multi-year highs.
