Market drivers and catalysts
Equities: Relief lifted the U.S. and Europe, while Asia reflected Monday’s oil-shock selloff before a cautious Tuesday rebound.
Volatility: VIX eases to 26.15, geopolitical risk remains key.
Digital Assets: Crypto rebounds with risk mood, Bitcoin leads, IBIT inflows strong, ETHA lags.
Fixed Income: Global yields lower, but volatile after Trump’s claims of diplomacy with Iran.
Currencies: USD partially rebounds after sell-off on Trump’s claims of diplomacy with Iran.
Commodities: Crude rebounds on escalating conflict concerns. Fertilizer shortages begin to bite. Gold holds above its 200-day moving average.
Macro events: Eurozone, UK and US March Flash PMIs, US Treasury to auction 2-year notes, Australia Feb. CPI (early Wed.).
Macro headlines
Stock futures fall while oil prices rise, as fragile optimism around a potential de-escalation fade. Trump’s decision to delay strikes on Iranian power plants—citing talks that Iran denied took place —initially supported risk sentiment, but caution has since returned as Israel continues its attacks. Meanwhile, reports that Saudi Arabia and the United Arab Emirates are preparing to join the conflict point to a potential escalation. The ongoing fighting continues to strain global supply chains for crude, refined fuels, fertilizers, and other key commodities as the Strait of Hormuz—a critical chokepoint remains under Iran’s control and effectively closed.
US private equity funds remain under pressure amid rising redemption requests from investors concerned about a recent spate of high-profile losses and growing unease over exposure to software companies vulnerable to AI disruption. These concerns have prompted outflows from private credit funds, testing safeguards designed to prevent forced sales of loans. Decisions by some of the largest private equity firms, including BlackRock and Apollo to restrict redemptions risk triggering a backlash from retail investors. However, executives argue such measures are necessary to protect remaining investors and avoid liquidating illiquid assets at distressed prices.
Japan's annual inflation dropped to 1.3% in February 2026, the lowest since March 2022. Food, transport, and clothing inflation slowed, while energy costs fell sharply. Inflation rose for household items, communications, and recreation. Core inflation fell to 1.6%, below the central bank's 2% target. Monthly CPI decreased by 0.2%, marking a three-month decline.
Australia's flash Services PMI for March fell sharply to 46.6 vs. 52.8 in February. The Manufacturing PMI fell to 50.1 versus 51.0 in February.
The Chicago Fed National Activity Index fell to -0.11 in February from an upwardly revised +0.20 in January, suggesting economic growth decreased in the month.
Macro calendar highlights (times in GMT)
0815 – France Flash March PMIs
0830 – Germany Flash March PMIs
0900 – Eurozone Flash March PMIs
0930 – UK March Flash PMIs
1215 – US Weekly ADP Employment Change (four weeks to Mar 7)
1230 – US Mar. Philadelphia Fed Non-manufacturing Activity
1345 – US March Flash PMIs
1700 – US Treasury to Auction 2-year notes
0030 – Australia Feb. CPI
Earnings this week
Today: Gamestop
Wednesday: PDD Holding, Paychex
Friday: Carnival
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: Wall Street rallied, with the S&P 500 up 1.2% to 6,581.00, the Nasdaq up 1.4% to 21,946.76 and the Dow up 1.4% to 46,208.47, after President Trump said the U.S. would delay strikes on Iranian energy infrastructure and Brent tumbled about 11% below $100 a barrel. The move favored fuel-sensitive and cyclical names, with American Airlines up 3.6%, JPMorgan up 1.2% and Goldman Sachs up 2.2%, while smaller stocks bounced 2.3%. Estée Lauder fell 7.7% despite merger talks with Puig, a reminder that even on relief-rally days, company-specific drama still turns up. Markets now watch whether the Iran pause becomes actual de-escalation or just a shorter fuse.
Europe: Europe recovered, with the STOXX 600 rising 0.6% to 576.78 and the Euro STOXX 50 up 1.3% to 5,574.32, after Trump’s pause on Iran strikes cut oil prices and eased some of the rate-hike fear that had hit the region hardest. The UK lagged, with the FTSE 100 still down 0.2%, but lower crude helped travel, miners and financials, while energy remained a drag. Pandora jumped 9.2% on lower precious-metal prices, Delivery Hero rose 7.9% after selling its Taiwan business to Grab, Telecom Italia gained 4.7% on Poste Italiane’s bid, and Air France-KLM added 3.9% as jet-fuel pressure eased. The next test is whether cheaper oil lasts long enough to calm Europe’s inflation nerves.
Asia: Asia told the tougher story from Monday’s close, with South Korea’s KOSPI dropping 6.5% to 5,405.75, Hong Kong’s Hang Seng falling 3.5% to 24,382.47 and Shanghai’s Composite shedding 3.6% to 3,813.28 as investors priced a longer Middle East energy shock before Washington’s later U-turn. Chip names led the pain in Seoul, with Samsung Electronics down 6.6% and SK Hynix off 7.4%, while Alibaba fell 3.2% in Hong Kong. BYD bucked the mood and rose 4.5% in mainland China as higher fuel costs revived the electric-vehicle angle. Tuesday trade improved, with the Nikkei up about 1.0% and the Hang Seng up 1.6%, but Asia still looks tied to oil first and everything else second
Volatility
Volatility remains elevated, but eased slightly at the start of the week. The VIX closed at 26.15, down 0.63 points on the day, even as shorter-term measures show a more mixed picture, with VIX1D sharply lower and VIX9D slightly higher, pointing to reduced immediate stress but continued uncertainty over the coming days. In practical terms, markets are still sensitive — just not in full panic mode.
The main driver remains the Iran war, now in its fourth week. Trump’s temporary pause on strikes briefly supported risk sentiment, but that calm looks fragile after Iran denied negotiations and oil prices moved higher again. With a significant share of global energy flows tied to the Strait of Hormuz, investors should expect volatility to stay closely linked to geopolitical headlines and energy markets. Today’s U.S. PMI data adds another layer, as any sign of slowing growth combined with rising energy costs could increase market pressure.
Options pricing currently implies an expected move of about ±152 points (±2.3%) for the S&P 500 into Friday 27 March. On today’s expiry, there is no clear downside panic skew, with near-the-money calls slightly more expensive than puts, suggesting caution but no aggressive demand for immediate protection.
Digital Assets
Digital assets are moving higher alongside broader risk sentiment, but the underlying driver remains macro rather than crypto-specific. Bitcoin trades around $70,800, Ether near $2,160, while XRP and Solana are holding around $1.41 and $91 respectively. The rebound follows the temporary easing in geopolitical tensions, although price action remains sensitive to any reversal in that narrative.
The more telling signal continues to come from ETF flows. Bitcoin ETFs saw strong net inflows on Monday, led by IBIT, while Ethereum ETFs recorded net outflows, with ETHA accounting for the majority of the decline. This divergence suggests that institutional demand is still concentrated in Bitcoin, while Ethereum and broader alt-coins are seeing less consistent support.
For investors, the takeaway is clear: crypto is still trading as part of the wider risk environment. When geopolitical risks ease, it benefits; when oil and inflation concerns return, it becomes more vulnerable. Within that backdrop, Bitcoin continues to show relative strength, supported by steady ETF demand, while Ether and most alt-coins remain more dependent on a broader improvement in sentiment.
Fixed Income
US treasuries roiled by Trump’s diplomacy claims. Treasuries rallied steeply after Trump claimed diplomacy with Iran is progressing, but later sold off again as the market is unsure of the status of any talks on Iranian denials of Trump’s claims. The benchmark US 2-year treasury yield posted a high above 4.00% before dropping as low as 3.79% and then rebounding to near 3.90% in the Tuesday session in Asia. The benchmark 10-year yield saw a similar pattern, rising as high as 4.44% before falling to 4.30% and then rebounding to 4.37%.
Japan’s government bond yield curve flattened slightly as short yields were stable near the cycle highs while the benchmark 10-year JGB retreated four basis point to 2.27% in the wake of slightly softer than expected February National CPI data.
Commodities
Crude futures trade higher following Monday’s sharp slump, after Trump delayed a threatened strike on Iran’s energy infrastructure by five days, citing talks that Tehran swiftly denied. With global energy markets tightening at a record pace amid the continued disruption to flows through the Iran-controlled Strait of Hormuz, caution has returned. Israel’s ongoing attacks, combined with reports that Saudi Arabia and the United Arab Emirates may join the conflict, point to a risk of further escalation.
For now, the clearest signal of stress lies in refined products—especially diesel and jet fuel—rather than crude. Crude’s relative resilience may come under increasing pressure as the initial buffer of elevated oil-on-water inventories continues to erode, and as pre-war shipments from the Persian Gulf are delivered, leaving a reduced flow of fresh supply after that point.
Gold and silver’s slump has been halted—but not reversed—following Monday’s Trump-led rebound, underscoring that both metals are, for now, trading more like risk assets. The Middle East conflict continues to drive a broad macro shock, forcing a repricing across global markets. A prolonged conflict is likely to weigh on sentiment by fuelling inflation concerns, lifting the dollar and bond yields, and reducing expectations for rate cuts. In gold, the 200-day moving average has emerged as a key line in the sand, offering support near USD 4,096.
In agriculture, the first signs of disruption are emerging. Fertilizer exports from the Persian Gulf have largely stalled, raising concerns about supply availability. In response, wheat farmers in Australia—one of the world’s major exporters—are reducing plantings as input uncertainty grows. Given wheat’s heavy reliance on nitrogen-based fertilizers, constrained supply risks translating into lower yields and tighter global balances.
Currencies
The US dollar rebounded late Monday and early Tuesday after initially selling off on Trump’s claims of diplomacy with Iran. While the market initially reacted strongly to the surprise and risk sentiment surged, the market is second guessing the situation and extent that any diplomacy is taking place after Iranian denials of Trump’s claims. EURUSD rose to a 1.1460 high from lows below 1.1490 earlier in the day after Trump’s social media post on Iran diplomacy, dropping back toward 1.1585 in early trading Tuesday in Europe.
The JPY was not particularly reactive to February National CPI data coming in slightly softer than expected as the energy price spike and Japan’s extreme dependence on supplies that normally run through the Hormuz Strait are the focus for risks to Japan’s economy and inflation levels from here. USDJPY dropped back below 159.00 and as low as 158.02 Monday before rebounding to 158.65+ early Tuesday.
Elsewhere, G10 small currencies, NZD excepted (so AUD, CAD, SEK and NOK), were weakest in Tuesday’s Asia session, as AUDUSD dipped back well below 0.6980 after trading as high as 0.7061 Monday. AUDNZD swooned to a 1.1934 low Tuesday before bouncing Tuesday, reacting Monday from levels above 1.2000 to the crush lower in Australian short yields on the huge oil price correction Monday. Australia reports its February CPI data early Wednesday.
