Markets Down amid War on Iran and Rising Energy Prices
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For the week ended Mar 6, 2026, Oil prices have surged roughly 30% since the start of 2026 as the Iran conflict escalated, with Brent recently trading near the low‑80s and briefly spiking in early March. Major U.S. equity markets were down between about 2% and 5% for the week, while many international and emerging‑market equity benchmarks saw deeper pullbacks in the mid‑single to low‑double‑digit range. The 10‑year U.S. Treasury yield climbed roughly 20 basis points as investors repriced inflation and rate‑cut expectations.
πΊπΈ U.S. Stocks – Weekly
Wrap
Market Overview
U.S. equities finished lower on a
stagflationary mix of geopolitics, an oil spike and a weak payrolls report.
Middle East escalation, including U.S. and Israeli strikes on Iran, raised
fears of renewed inflation and higher‑for‑longer rates. Softer labour data added
growth worries, turning “bad news” into risk‑off
rather than “more cuts” optimism.
Oil prices jumped on fears of supply
disruption and shipping risk around the Strait of Hormuz, complicating the
Fed’s task just as labour momentum cools. This weaker‑growth and higher‑inflation
combo hit both stocks and bonds. Of the major equity indexes, Dow Jones
Industrial Average Index(DJI) performed worst, followed by the S&P 500
Index(SPX) and the Nasdaq Composite(COMP).
(Refer to the major indices’ weekly
performance tables below.)
Major Indices – Weekly Performance
· Dow Jones: −3.01%
· S&P 500: −2.02%
· Nasdaq Composite: -1.24%
Key Highlights for the Week and Outlook
1️⃣ Geopolitical shock, oil
spike, inflation fears
Escalating conflict in the Middle East after strikes on Iran sent oil sharply
higher, with Brent up about 30% YTD. When key routes like the Strait of Hormuz
are at risk, markets tend to react quickly through energy prices.
What worries investors now is duration. A prolonged conflict could keep oil elevated, squeeze real incomes and pressure margins. Some analysts have flagged the risk of crude retesting 100 if disruptions deepen, which would be a more serious headwind.
2️⃣ Feb payrolls disappoint, but
not yet recession
U.S. nonfarm payrolls fell 92k in Feb vs expectations for a modest gain. Prior
months were revised lower, and three‑month job creation has slowed sharply,
showing clear cooling in the labour market. The unemployment rate ticked up to
4.4%, still low historically but moving off cycle lows.
Normally, weak jobs data would support earlier Fed cuts. This time, the oil shock and inflation risk are offsetting that effect. Markets are more cautious about assuming “soft data = aggressive easing” when energy is pushing headline inflation higher.
3️⃣ Fed’s balancing act gets
harder
Higher oil is likely to feed into headline CPI via gasoline and broader energy
costs. With inflation still above the 2% target, the Fed may hesitate to cut
aggressively if energy‑driven price pressures re‑emerge, especially while wage
and services inflation remain sticky.
Rate markets have already priced in fewer cuts and pushed expectations later into 2026. The Fed is now even more data‑dependent, needing evidence that both core and headline inflation are easing despite the oil spike.
4️⃣ ISM data still show
expansion
Despite the risk‑off tone, ISM data remain constructive. Manufacturing PMI
printed 52.4 in Feb, back in expansion territory, while services are also
comfortably above 50. Together, they point to ongoing growth, even as hiring
slows and geopolitics darken near‑term sentiment.
5️⃣ Oil would need to stay much
higher to derail growth
The U.S. economy is less oil‑intensive than in the past, and domestic
production offers a buffer. Energy is a smaller slice of GDP and household
budgets than in prior oil crises, which reduces the hit from price spikes.
Given today’s structure, it likely takes a larger and more sustained move in oil to truly derail the cycle. If crude stabilises below extreme levels, this episode may be remembered more as a volatility shock than a lasting turning point.
6️⃣ Near‑term vol high, medium‑term
still constructive
With no clear sign of de‑escalation yet,
further vol in the near term is likely. Geopolitical shocks, however, have
often proved sharp but temporary once risk premia reset and supply routes
adapt.
Beyond the noise, the macro backdrop is still reasonably supportive: earnings are improving from last year’s trough, many global activity indicators are in expansion, and structural themes like AI, automation and productivity remain intact.
S&P 500 Sectors in Focus
Energy (XLE) was the only sector up on
the week, as it directly benefits from higher crude. Communication Services
(XLC), Tech (XLK) and Financials (XLF) slipped a moderate 0.5%–1.7%, reflecting
risk‑off but not capitulation.
Materials (XLB), Consumer Staples (XLP)
and Healthcare (XLV) were the laggards, down about 4.6%–6.7%, as investors took
profit in prior defensives and rotated into energy and cash.
(Refer to the SPX sector ETF weekly
performance table below.)
Technical snapshot – major U.S. indices
All three major indices are now negative
YTD, having given back their 2026 gains. SPX is firmly below its 20‑ and 50‑day
MAs, closing at its lowest since the week of 17 Nov, with a YTD return of about
−1.54%.
The Dow has also erased its YTD gain and
is at its lowest since the week of 24 Nov, with roughly −1.17% YTD. The Nasdaq
sits at a three‑week low and is the weakest of the three at −3.68% YTD,
reflecting its higher rate sensitivity.
π Weekly charts:
π¨π³ China / ππ°
Hong Kong Markets
Market Overview
Chinese equities retreated over the week
as investors weighed the escalating Middle East conflict and higher oil prices
against Beijing’s latest policy messaging at the National People’s Congress. The
blue chip benchmark CSI 300 Index fell 1.07%, and the Shanghai Composite Index(SSE)
declined 0.93%. In Hong Kong, the benchmark Hang Seng Index dropped 3.28% as
risk sentiment deteriorated across the region.
·
CSI 300: -1.07%
· Shanghai Composite: -0.93%
· Hang Seng Index: -3.28%
Key Highlights – China & Hong Kong
1️⃣ Beijing lowers growth
ambitions modestly
China set a 2026 GDP growth target of 4.5%–5%, a step‑down that signals
acceptance of slower but “higher‑quality” growth as the new five‑year cycle
begins. It is another move towards more realistic, flexible targets.
2️⃣ Domestic demand remains a
top priority
Premier Li Qiang reiterated the need to boost domestic demand and investment
amid global uncertainty. Measures include more special‑purpose bond issuance
and ultra‑long sovereign debt to support infra, strategic sectors and local
government financing.
3️⃣ Factory data send mixed
signals
Official manufacturing PMI stayed in
contraction around 49.0, showing ongoing pressure on larger, state‑linked
firms. The private Caixin index, however, rose above 52, suggesting smaller and
export‑oriented firms are doing better, helped by targeted support and a weaker
currency.
(Refer to the Hang Seng Index
constituents’ weekly performance table below.)
π Weekly charts:
πΈπ¬ Singapore Market –
Weekly Wrap
Market Overview
The Straits Times Index (STI) saw a mild move on the day but a notable pullback
on the week as it continued to consolidate after a strong multi‑week rally. The
index closed around 4,848 on March 6, essentially flat on the session but down
about 2–3% over the past month as profit‑taking set in.
JMH, SIA and SATS were among the top
losers. On the upside, ST Engineering, DFI Retail and SingTel outperformed,
reflecting selective interest in industrials, defensives and telcos.
Market Leaders
Outperformers:
- ST
Engineering (S63): +9.83%
- DFI
Retail (D01): +3.58%
Banks:
- DBS
(D05): -3.71%
- OCBC
(O39): -2.85%
- UOB
(U11): -2.43%
(Refer to the STI weekly performance
table below.)
Technical Snapshot – STI
The STI remains in a strong primary uptrend on a multi‑month view, even after
snapping its nine‑week winning streak. It closed just above its 50‑day MA
around 4,846, suggesting the current move is still a pullback within an uptrend
rather than a confirmed trend change.
π Weekly chart:
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