Market drivers and catalysts
Equities: US softened on oil and software, Europe edged up on semis, and Asia rallied as ceasefire hopes cooled energy fears.
Volatility: Volatility easing but still elevated
Digital Assets: Crypto stabilises with risk mood; ETF outflows cap upside
Fixed Income: Treasury yields ease back on hopes that Trump peace proposal will gain traction
Currencies: USD mixed with weak correlation to risk sentiment swings on Iran war headlines. AUD weak after soft CPI numbers
Commodities: Crude eases, gold firms as diplomatic efforts to end the war offer relief
Macro events: Germany March IFO Business Climate
War in Iran: Navigating market uncertainty
Please join Saxo's John J. Hardy, Global Head of Macro Strategy and Ole Hansen, Head of Commodity Strategy for a follow up webinar today at 12:00 GMT that will focus on:
The evolving geopolitical landscape
How energy markets are responding and the risks of further disruptions
The impact on global equities, currencies, and commodities
What investors can do to navigate volatility and position portfolios in a fast‑changing environment
Sign up here: https://www.home.saxo/insights/events-and-webinars
Macro headlines
Relief emerged across financial markets after reports that the Trump administration has presented Iran with a 15-point plan to end the war, giving investors a reason to price in the possibility of a pause in hostilities—even if a durable settlement still appears distant. For now, this has become the primary focus, offsetting ongoing escalation risks, including Trump’s deployment of 2,000 troops, Saudi Arabia and the UAE signalling readiness to join the conflict, Tehran showing little willingness to compromise, and Israeli officials maintaining their intent to continue strikes on Iran.
UK Feb. CPI out early Wednesday saw headline inflation rising 0.4% MoM and 3.0% YoY, both as expected and vs. 3.0% YoY in Jan., while the core CPI data rose 3.2% YoY vs. 3.1% expected and 3.1% in Jan. Services CPI rose 4.3% vs. 4.2% expected and 4.4% in Jan.
Australia’s Feb. CPI came in slightly softer than expected early Wednesday at 3.7% YoY for the headline (vs. 3.8% expected and 3.8% in Jan) and 3.3% for the core “trimmed mean” measure (vs. 3.4% expected and 3.3% in Jan.). The month-on-month figures were 0.0% for the headline and +0.2% for the trimmed mean
- The US Composite PMI fell to 51.4 in March 2026, its lowest since last April, signalling slowing growth. Business activity hit an 11-month low due to softened orders and price surges. Services led the slowdown, while manufacturing stayed resilient. Confidence weakened, causing the first employment drop in over a year, with sharp input cost rises driving selling prices up.
The US Manufacturing PMI rose to 52.4 in March 2026, surpassing expectations. Production and new orders grew, supported by stabilising export demand. Despite slowed employment growth and longer delivery times, business confidence reached a 13-month high amid reduced tariff worries and optimism over domestic demand.
US nonfarm productivity grew 1.8% in Q4 2025, down from 2.8% estimated, and lower than Q3's 5.2% surge. Manufacturing productivity fell 2.5%. Annually, productivity grew 2.5% in Q4 but slowed to 2.1% for 2025, indicating a deceleration in efficiency gains.
Macro calendar highlights (times in GMT)
0900 – Germany March IFO Business Climate
1700 – US Treasury to sell USD 70 billion 5-year Notes
Earnings this week
Today: PDD Holding, Paychex
Thu: Carnival
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 slipped 0.4%, the Nasdaq fell 0.8%, and the Dow was down 0.2% as fresh doubt over progress in Iran talks pushed Brent crude back above $104 and kept investors cautious. Energy was the clear exception, with the sector rising 2% and standing as the only S&P 500 group still positive for March, while software and crypto-linked names dragged on sentiment. Circle Internet dropped 20% and Coinbase fell almost 10% after changes to the Clarity Act barred platforms from offering yield on stablecoin balances, and Salesforce lost 6.2% due to a new update to Anthropic's agentic tool, which can now complete tasks on one's computer.. Markets now watch oil first, then everything else.
Europe: The STOXX 50 added 0.1% to 5,581.3 and the STOXX 600 rose 0.4% to 579.3, helped by chip equipment and chemical names even as Middle East tensions kept the energy backdrop uneasy. ASML outperformed after SK Hynix announced an $8 billion lithography equipment order, while easing European natural gas prices lifted Air Liquide by 2.2% and BASF by 4.5%, giving investors a welcome break from the usual input-cost headache. Banks lagged as softer March purchasing managers index data pointed to activity pressure, with Nordea down 2.4% and ING off 1.4%. The next test is whether lower gas prices can keep offsetting the drag from pricier oil.
Asia: Asian equities rallied strongly on Wednesday morning as hopes of a US-backed ceasefire in the Middle East pushed oil prices lower and lifted risk appetite across the region. Tuesday had already set the tone, with the Hang Seng jumping 2.8%, the Kospi rising 2.7%, the Nikkei 225 gaining 1.4%, and the Topix adding 2.1%, as financials and technology led the rebound after Washington delayed attacks on Iranian energy infrastructure. AIA Group and Laopu Gold helped drive Hong Kong higher, while SK Hynix supported South Korea amid plans to pursue a US listing through American depositary receipts, and Tokio Marine advanced on news of a Berkshire Hathaway investment. The rally continued into Wednesday, with the Nikkei up 2.9%, the Topix 2.3%, the Kospi 3.1%, and the ASX 200 2.0%, as investors watched diplomacy closely while welcoming some relief in oil.
Volatility
Market volatility continues to be driven primarily by developments in the Middle East and the associated moves in oil, rather than a typical earnings or macro cycle. Reports of a potential U.S.-Iran ceasefire proposal helped calm markets, lifting equities and pushing oil lower, but conflicting signals from Tehran mean investors are not yet fully trusting the move. That cautious tone is reflected in volatility metrics: the VIX closed at 26.95, while short-term measures remain active with VIX1D at 20.73 and VIX9D at 28.21, suggesting near-term uncertainty is still elevated. VIX futures (VX front-month at 24.41, VX second-month at 23.70) and a firm SKEW at 142.63 point to ongoing demand for protection, even as immediate stress eases.
SPX expected move: Options pricing implies a move of around ±126 points (±1.93%) into Friday’s expiry, highlighting that markets still expect meaningful swings over the next few sessions.
- Today’s skew check: The same-day options chain shows a slight upside skew, with near-the-money calls around the 6560 strike priced marginally richer than puts. This suggests investors are leaning toward upside participation, although the signal remains modest rather than decisive.
Digital Assets
Crypto markets are trading more in line with broader risk sentiment again, stabilising after earlier weakness tied to the oil-driven risk-off move. Bitcoin is holding around $71,000, with Ether near $2,166, while Solana and XRP are also edging higher. The backdrop is supportive in the short term, as easing geopolitical tension and lower oil prices tend to improve liquidity and risk appetite across markets.
However, institutional demand remains a key weak spot. U.S. spot bitcoin ETFs recorded $66.6 million of net outflows on 24 March, including -$4.7 million from IBIT, while spot ether ETFs saw -$40.7 million of net outflows, with ETHA accounting for -$25.0 million. This divergence matters: prices are stabilising, but flows suggest institutions are not yet fully re-engaging. Crypto-related equities such as COIN, MSTR, and miners also remain under pressure, reinforcing the idea that conviction is still limited.
Fixed Income
US treasury yields retreat slightly from Tuesday highs. Treasuries rallied late Tuesday on hopes that the Trump administration’s peace plan would kickstart a peace negotiation process in Iran. The US benchmark 2-year treasury yield retreated from highs above 3.95% (inspired by weak demand at a 2-year treasury auction) to as low as 3.86% before rebounding to 3.89% early Wednesday. The benchmark 10-year yield saw a similar pattern, trading near 4.35% early Wednesday relative to the multi-month high from Monday near 4.44%.
Europe’s yields rebounded Tuesday before the airing of the Trump’s peace proposal, with the German benchmark 2-year Schatz yield rising ten basis points from the Monday close to 2.67%, but likely set to open lower Wednesday. Longer yields saw less volatility, with the benchmark 10-year Bund closing Tuesday two basis points higher near 3.03%.
The Japanese government bond yield curve flattened again slightly on Wednesday as short yields remained near the cycle- and modern highs while the benchmark 10-year JGB retreated slightly to 2.26%
Commodities
Oil trades back near USD 100 following reports that the US has intensified diplomatic efforts to end the war with Iran. At the same time, Tehran continues to allow the passage of “non-hostile vessels” through the Strait of Hormuz, enabling some crude and fuel to reach an increasingly tight global market. While the war risk premium continues to ebb and flow, underlying tightness across key commodities - from crude and refined fuels to gas, helium, and fertilizers - is building, as most tankers that set sail before the disruption have now reached their destination and discharged their cargo.
Gold and silver are trading higher, highlighting how the recent sell-off was primarily a liquidity-driven event, amplified by challenging macro conditions. Elevated oil prices have fuelled inflation concerns, reducing rate cut expectations while pushing yields and the dollar higher. A degree of normalisation would ease these pressures, allowing investors to refocus on gold’s long-term case, which in our view has been challenged but not removed.
The Bloomberg Commodity Index (BCOM) is up 8% this month, with Goldman Sachs estimating that roughly 80% of the index - comprising 26 major commodity futures - is either directly or indirectly exposed to the conflict through supply disruptions. Adding that with supply becoming increasingly concentrated and commodities more frequently used as tools of leverage, the situation underscores the sector’s role as a portfolio hedge and its embedded insurance value.
Currencies
The US dollar was mixed Tuesday and early Wednesday as it showed weak reactivity to swings in risk sentiment or crude oil prices on the Trump administration’s peace proposals that have yet to elicit an Iranian response. EURUSD rose as high as 1.1630 as risk sentiment improved in Asian trading hours Wednesday before dipping back below 1.1600 later in the session.
The JPY was particularly weak Wednesday as USDJPY rose toward 159.00 and EURJPY rose as high as 184.56, a more than three-week high 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.
The Australian dollar traded somewhat soft Wednesday after the Feb. CPI data from Australia came in just below expectations, taking Australia’s short yields lower and slightly lowering expectations for the RBA’s rate hike trajectory. AUDUSD trades 0.6971 early Wednesday after a 0.7004 high overnight, while EURAUD is pulling back higher near 1.6635, not far from the more than three-week highs above 1.6650 posted Tuesday.
