Summary

• Global equities posted their fifth consecutive weekly decline amid the month-long US-Iran conflict, with the S&P 500 falling ~2.1%, the Nasdaq Composite dropping ~3.2%, and the Dow Jones declining ~1.7%, leaving major US indices down 6-9% from January peaks and testing 2026 lows.

• Energy surged as the dominant winner on sustained high oil prices (Brent near $105-112/bbl), with financials showing selective resilience on steeper curves; technology, consumer discretionary, and growth sectors led losses as risk premiums expanded and inflation fears mounted.

• Bond yields pushed higher, with the US 10-year Treasury climbing toward 4.39-4.50% as markets repriced for persistent inflation risks from energy shocks and pushed back Fed cut expectations into late 2026 or beyond.

• Commodities remained sharply divergent: oil held elevated levels with weekly gains despite some intraday volatility from diplomatic signals, cementing energy's outperformance; gold faced pressure from rising real yields and dollar strength, while base metals softened on growth concerns.

• The USD strengthened further as a safe-haven amid higher-for-longer US rates and geopolitical uncertainty, weighing on EUR/USD, GBP/USD, and emerging market currencies.

Market review: Prolonged Iran conflict keeps oil elevated and broad risk appetite suppressed

The global financial markets closed out March under persistent pressure from the ongoing US-Iran conflict, now approaching its fifth week, with supply disruptions in the Strait of Hormuz and threats to energy infrastructure keeping oil prices firmly elevated. Diplomatic efforts—including a reported US 15-point ceasefire plan and tanker escorts—produced fleeting relief rallies mid-week, but skepticism over a quick resolution and renewed escalatory headlines drove a risk-off tone that extended the longest US equity losing streak in nearly four years.

US indices showed resilience in spots (mid-caps and small-caps occasionally outperformed on rotation), yet the S&P 500 and Nasdaq bore the brunt as higher discount rates from elevated energy costs and hawkish central bank signals weighed on valuations. Energy stocks extended their strong run as the clearest beneficiary, while financials held up better amid curve steepening. Technology and growth names continued to lag, amplifying the value-over-growth and cyclical-over-defensive rotation that has defined much of 2026 so far. Internationally, Europe faced added stagflation risks from energy dependency, while Asian markets were mixed but generally softer under dollar strength.

Fixed income offered limited shelter, with Treasury yields rising on inflation repricing even as some quality credit held relatively firm. Commodities highlighted the macro divide: oil's resilience near or above $100-110/bbl underscored energy's winning status and the conflict's broad economic bite, whereas gold and other non-energy assets retreated under higher real yields and USD bid. Dispersion across stocks remained high, providing some buffer to cap-weighted indices but underscoring challenges for broad exposure.

In short, the conflict continues to hurt—driving inflation risks, delaying easing cycles, and forcing rotations that favor narrow pockets of strength. Markets are displaying classic geopolitical stress: winners concentrated in energy and the dollar, losers spanning growth equities, duration, and import-dependent sectors. With central banks now pricing in fewer (or no near-term) cuts, the environment remains volatile and headline-driven.

The week ahead

The week of March 30–April 5, 2026, features a lighter data schedule in the US (with Good Friday holiday closures) but still carries meaningful global growth and inflation signals that could amplify or ease the current tensions. Key focus falls on flash PMI surveys (Tuesday for US, Eurozone, and others) — these will provide the first hard read on how elevated energy costs and uncertainty are filtering into business activity. Consensus expects modest softening, but any sharper downside (especially in manufacturing) could heighten stagflation fears and pressure risk assets further.

Additional highlights include US ADP private payrolls (Wednesday) and any lingering central bank echoes from last week's decisions. Geopolitical developments around the Iran conflict remain the dominant wild card: signs of de-escalation, successful tanker passages, or progress on ceasefire talks could trigger sharp relief rallies in equities and a pullback in oil, while renewed strikes or Hormuz disruptions would likely extend the risk-off move.

My base-case forecast: choppy, defensive trading with elevated volatility persisting into early April. If PMIs show only mild slowdowns and diplomatic headlines tilt positive, expect a tactical bounce in equities (S&P potentially stabilizing or testing upside toward 6,500-6,600) with energy still leading and some rotation back into beaten-down growth names. However, hotter inflation signals via PMIs or fresh conflict escalation would likely keep yields bid (10-year US Treasury testing 4.45-4.55%), sustain USD strength, and favor energy, financials, and selective defensives while pressuring multiples in tech and cyclicals. Oil may consolidate but stays supported above $100 unless a clear ceasefire emerges; gold could find bids on any safe-haven spikes.

Overall, this remains a headline-dominated market where the Iran conflict's trajectory will outweigh fundamentals in the near term. Position for continued rotation, guard against volatility spikes, and watch energy/inflation linkages closely — de-escalation hopes can spark quick reversals, but persistence of disruptions suggests caution on stretched valuations until clarity improves.

The value of investments and the income from them can go down as well as up and investors may get back less than originally invested. Investments in bonds are subject to interest rate, inflation and credit risks. Investments in emerging markets are subject to certain risks, which include, for example, risk of liquidity and volatility. Investments in foreign currencies are subject to exchange rate fluctuations. Any reference to individual securities does not constitute a recommendation to purchase or sell such securities. The information contained herein is not considered investment advice and should not be relied upon as such.

Grok, xAI Market Sentinel