Market drivers and catalysts
Equities: Oil and weak data hit the U.S. and Europe, while Asia finished mixed before Monday’s sharper energy shock.
Volatility: Geopolitical risk, oil spike, elevated VIX, strong downside hedging
Digital Assets: Bitcoin stable, ETF outflows, IBIT and ETHA weaker
Fixed Income: Japan’s yield curve steepens on inflation worries. US treasury yields jump to new local highs to start the week.
Currencies: US dollar continues to trade as the safe haven currency amidst weak risk sentiment.
Commodities: Crude jumps past USD 100 amid the worst disruption to global energy supply in decades
Macro events: Germany Jan. Factory Orders and Industrial Production
Macro headlines
Fears of a global economic slowdown and an inflation crisis continue to gather strength after Brent crude futures jumped by 30% on the Monday opening, almost touching USD 120 before easing after the FT reported the G-7 is discussing the release of oil from IEA reserves as major Middle East producers curbed production and the Strait of Hormuz—which normally handles 20% of global crude supply—remained all but closed as the war in the Middle East showed no signs of abating, with US and Israeli attacks being met with Iranian counterattacks on its neighbours in the region, causing the biggest disruption to global flows of crude and fuel products in decades. With the Persian Gulf also hosting major refineries and gas production, the immediate tightness is currently being felt the most in diesel, jet fuel, and LNG, all of which have surged by more than 75% in the last week.
Iran appointed Mojtaba Khamenei as its new supreme leader amid escalating Middle East tensions and ongoing missile attacks from Iran on Persian Gulf countries. The US State Department ordered US employees to leave Saudi Arabia due to increased threats, and President Trump signalled potential expansion of US military actions against Iran.
President Trump faces mounting pressure in the second week of the Iran conflict, dealing with rising gas prices, strained munitions supplies, and opposition from voters, including his MAGA base. He dismissed concerns, claiming oil price hikes are "short-term" and necessary for "safety and peace”.
U.S. experienced a loss of 92,000 jobs in February, significantly lower than January's increase of 126,000 and falling short of economists' expectations of a rise of 50,000. The unemployment rate also rose unexpectedly to 4.4% versus 4.3% in January
Macro calendar highlights (times in GMT)
0700 – Germany Jan. Factory Orders
0700 – Germany Jan. Industrial Production
2330 – Australia Mar. Westpac Consumer Confidence
0030 – Australia Feb. NAB Business Survey
Earnings this week
Today: Constellation Software, Hewlett Packard Enterprise
Tuesday: Oracle, Volkswagen, Franco-Nevada, Chocoladefabriken Lindt & Spruengli
Wednesday: Inditex, Rheinmetall, Porsche, Henkel
Thursday: Adobe, Wheaton Precious Metals, Assicurazioni Generali, BMW, RWE, Hannover Re, Dollar General, Ulta Beauty, Lennar
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The S&P 500 fell 1.3% to 6,740.02, the Dow dropped 0.9% to 47,501.55, and the Nasdaq lost 1.6% to 22,387.68, as a 12% jump in U.S. crude and a weaker February payrolls report revived the market’s least favorite mix: slower growth and hotter inflation. Marvell jumped 18.4% after giving a stronger multi-year outlook tied to booming artificial intelligence demand, while BlackRock fell 7.3% after limiting withdrawals from a major private credit fund and Western Alliance slid 8.4% after suing Jefferies over unpaid loan obligations. Markets now watch whether Wednesday’s U.S. inflation data adds more fuel to an already lively fire.
Europe: Europe stayed under pressure, with the STOXX 600 down 1.0% to 598.70, the Euro STOXX 50 off 1.1% to 5,782.89, and the FTSE 100 lower by 1.2% to 10,284.75. The main drag was familiar: Middle East tension pushed oil higher just as weak U.S. jobs data darkened the growth picture, leaving investors to price a more stagflation-like backdrop for a region that imports a lot of energy. HSBC fell 2.6%, Allianz lost 1.1%, Zealand Pharma dropped 36.4%, and Roche slipped 2.7%, while Rheinmetall rose 2.9% and Leonardo added 3.4% as defence and energy provided the rare pockets of green.
Asia: Asia finished Friday in mixed fashion before Monday’s much sharper selloff, with Japan’s Nikkei 225 down 6.7% to 51,887.10, Hong Kong’s Hang Seng up 1.7% to 25,757.29, China’s CSI 300 up 0.3% to 4,660.44, and South Korea’s KOSPI little changed at 5,584.87. The split reflected the region’s two minds: oil importers such as Japan stayed under pressure, while Hong Kong and mainland China found support in large-cap tech and domestic-facing names. In Hong Kong, Alibaba rose 3.5%, Tencent gained 3.4%, and Xiaomi added 3.8%, helping lift the market despite the wider geopolitical fog. Investors now brace for the next session after oil’s weekend surge turned Asia’s cautious mood into something closer to a fire drill.
Volatility
Market volatility is expected to remain elevated at the start of the week as investors digest the weekend escalation in the conflict between the U.S., Israel and Iran and the sharp reaction in energy markets. Oil prices surged above $110 per barrel, raising concerns about potential disruptions to supply routes through the Strait of Hormuz and reviving inflation worries across global markets.
Volatility indicators reflect this nervous backdrop: the VIX closed Friday at 29.49, while very short-term measures remain even higher (VIX1D 32.65, VIX9D 30.44), suggesting investors are paying a premium for near-term protection. At the same time, the CBOE SKEW index around 151 points to strong demand for downside hedging.
Options pricing currently implies that the S&P 500 could move about 194.78 points, or 2.89%, by Friday 13 March, while today’s expected move is roughly 98.59 points, or 1.46%. The options market also continues to show a clear downside bias, with put options priced richer than comparable calls, indicating that investors remain more focused on protecting against further declines than positioning for a sharp rebound.
Digital Assets
Digital assets are holding up relatively well despite the broader risk-off tone in global markets, although the overall sentiment remains cautious. Bitcoin is trading near $67,600, Ethereum around $2,000, Solana near $84, and XRP around $1.36. However, the listed crypto ecosystem continues to show some pressure, with BlackRock’s Bitcoin ETF (IBIT) around $38.60 and the iShares Ethereum Trust (ETHA) near $14.93.
Institutional demand has softened recently, with U.S. spot Bitcoin ETFs recording notable net outflows late last week, including withdrawals from IBIT, while Ethereum ETFs also saw modest outflows including from ETHA. This suggests some investors reduced exposure as geopolitical tensions and oil volatility intensified.
For now, bitcoin appears relatively resilient compared with other risk assets, but the broader crypto market — particularly higher-beta tokens and crypto-linked equities — remains sensitive to swings in macro sentiment, energy prices and global risk appetite.
Fixed Income
US Treasury yields gapped higher to open trading this week on the implications for inflation from the enormous spike in crude oil prices. The benchmark 2-year yield gapped five basis points higher and briefly traded at the top of the multi-month range at 3.63% before settling back slightly. Forward Fed rate expectations are now only pricing about one and a half 25-basis point rate cuts for 2026. The benchmark 10-year treasury yield traded in early European hours Monday at 4.19%, up about six basis points from the Friday close.
US high yield corporate bonds came under selling pressure on weakening risk sentiment Friday, with the Bloomberg measure of the spread between high yield bond yields and US treasury yields widening 13 basis points to 296 basis points, the highest level since November.
Japan’s government bond yield curve steepened, with the longest-dated JGB’s under significant pressure as the benchmark 30-year JGB yield jumped over seven basis points to trade at 3.48% late in Tokyo hours, though this was down slightly from an intraday high above 3.50%. The benchmark 10-year yield traded less than two basis points higher at 2.19% and down from a Monday intraday high of 2.23%. The benchmark 2-year JGB yield nudged a basis point lower within the recent trading range centred on 1.24%.
Commodities
The Bloomberg Commodity Index has gained 13% since the Middle East conflict began, led by a 39% surge in the energy index in response to disruptions to the flow of crude, refined products, gas, and aluminium through the narrow Strait of Hormuz. Given their biofuel link to energy and rising food security concerns tied to the conflict, the grains sector has also posted steady gains, while precious metals have weakened as investors booked profits to raise liquidity amid deleveraging concerns and a stronger dollar.
Brent crude surged to near USD 120 in early trading amid a continued and massive disruption to global energy flows as the Strait of Hormuz remains effectively shut over fears of Iranian attacks. Prices eased back after the FT reported a potential release of oil from IEA reserves. However, the biggest near-term disruption is in refined products, such as diesel and jet fuel, as several producers in the Persian Gulf region — which have become major refining hubs over the past decade — have shut in production or are being disrupted.
Gold initially traded lower as crude prices surged on the assumption that higher energy costs could lift inflation and delay or even remove rate cut expectations. However, this assessment may be misplaced as the current price surge reflects a supply shock, not stronger demand, raising the risk of stagflation that could ultimately force central banks to provide economic support. In the short term, deleveraging and a stronger dollar, may weigh on prices without removing the underlying reasons investors have increasingly been flocking to hard assets in recent years.
Currencies
Volatility in the major currencies rose, but remains muted relative to the volatility elsewhere, with the US dollar seen as the chief safe haven currency when risk sentiment is on the defensive. EURUSD traded as low as 1.1507 in Monday in Asian hours after the Friday close of 1.1618 before rebounding above 1.1560 later by early European hours. USDJPY traded as high as 158.90, its highest level since late January before easing back below 158.50, still sharply up from the 157.78 close Friday.
EM currencies are more sensitive to the weak risk sentiment and strong US dollar, with USDMXN posting a new local high above 18.00 Monday before easing back to 17.96, still up almost 0.9% from Friday’s close. The South African Rand (ZAR) was even more volatile, with USDZAR trading early Monday in Europe at 16.82, up more than 1.6% from Friday’s close.
Many market participants see the Swiss franc as a safe haven currency, but traders seem reluctant to take EURCHF below 0.9000 after recent Swiss National Bank rhetoric suggesting a willingness to intervene. EURCHF briefly traded at 0.8992 before rebounding to 0.9010 Monday.
