Energy Shocks and Inflation Keep Investors on Edge
Weekly Market Snapshot
Global and U.S. equities declined as surging crude prices—driven by escalating Middle East tensions—revived inflation concerns and reinforced expectations of a hawkish Federal Reserve (Fed). The Fed kept interest rates steady and projected a single rate cut in the year. Stock futures edged higher on Friday as easing geopolitical worries lifted sentiment, with markets taking note of more optimistic signals around the Iran conflict and the ‘Triple Witching’ event with $5.7 trillion in options set to expire. Energy prices continued to rise through week due to the tensions in the middle east and attacks on Qatar’s natural gas infrastructure. Canada’s labor data softened while Eurozone inflation ticked higher, and corporate news was mixed, with Nvidia securing approval to sell AI chips in China and Alibaba reporting sharp earnings drop. Uber’s major robotaxi investment and workforce shifts at HSBC and Meta, also shaped investor sentiment.
In global geopolitics, the joint U.S.–Israeli Operation Epic Fury continued to intensify, marked by ongoing strikes against Iranian leadership and sustained targeting of critical energy infrastructure. Iran and Israel persisted in launching strikes across each other’s territories, while oil prices continued to climb amid the ongoing blockade of the Strait of Hormuz. Prime Minister Netanyahu’s suggested assertion that Iran had lost key nuclear and missile capabilities has raised hopes for an early end to the war. Japan, Canada and European countries, have expressed their willingness to provide logistical and naval support for keeping the Strait of Hormuz open. U.S. mediated Russia‑Ukraine peace talks were paused as Washington redirected its attention toward the Iran conflict. Russia and Ukraine continued to claim frontline gains across multiple regions, even as Ukraine dispatched anti‑drone specialists to Gulf states to help counter Iranian-made Shahed drones. President Trump has postponed his meeting with President Xi Jinping due to the Iran war.
Weekly Market Movers — Key Highlights
- Surging oil and gas prices pressured equities, and revived inflation worries amid escalating Iran–Israel regional conflict.
- Higher U.S. wholesale inflation, softer Canadian labor market in Canada and hotter Eurozone inflation reinforced policy caution.
- Nvidia gained regulatory approval in China, while Alibaba posted sharply lower earnings.
- Risk-off sentiment persisted on inflation and geopolitical pressures, though select corporate moves—such as Uber’s robotaxi investment—stood out.
Global Updates
- The MSCI All Country World Index fell over the week, as global stocks were dragged down by rising crude prices due to the continuing conflict in the middle east. Surging crude rekindled inflation worries and investors priced in the Fed’s hawkish stance.
- The European Central Bank (ECB), Bank of England (BOE), Sweden’s Riksbank, and the Swiss National Bank all held their policy rates steady, citing heightened inflation and growth uncertainty. Market expectations now point toward potential rate hikes by both the ECB and BOE later in the year.
- Average hourly earnings in Canada increased by 4.2% to CAD 38.49 in February. The Unemployment rate in Canada rose to 6.7% in February 2026, while the Labor Force Participation rate decreased to 64.9% in February from 65% in January 2026.
- The Eurozone’s annual inflation rate rose to 1.9% in February 2026, while core inflation climbed to 2.4%.
- Nvidia received Beijing’s clearance to sell its H200 AI chips in China.
- Alibaba reported a 66% drop in its net income to 15.6 billion Chinese yuan for the fiscal quarter ended Dec. 31, 2025, due to a 74% drop in its operational income attributed to investments in consumer experiences and technology. The company’s revenue was lower-than-expected at 284.8 billion Chinese yuan for the quarter.
- Iran has continued launching retaliatory strikes on neighboring Gulf countries following the killing of its security chief. Energy facilities in Qatar suffered extensive damage, and Kuwait experienced drone and missile interceptions as well as related disruptions.
- Italian bank UniCredit has submitted a $40 billion takeover proposal for Commerzbank.
- Oil prices rose over the week as attacks by Iran on oil and gas facilities around the Gulf escalated following Israel’s attack of Iran’s South Pars gas field and petrochemical infrastructure in Asaluyeh. European natural gas prices rose by 35% after Iranian and Israeli strikes hit key Middle Eastern gas infrastructure, causing long term damage.
- Gold prices headed for a third consecutive weekly decline, pressured by a firm U.S. dollar and as a hawkish U.S. Federal Reserve dampened hopes for near-term interest rate cuts.
- French Foreign Minister Jean‑Noel Barrot assured a 100% higher humanitarian aid of €17 million to Lebanon to manage the impact of Israel’s military campaign.
U.S. Equity
- U.S. equity markets remained in a pronounced risk‑off posture for the fourth consecutive week, pressured by renewed inflation concerns, a sharp upswing in oil prices, and heightened geopolitical uncertainty. Recent disruptions to global oil supply stemming from the escalating conflict involving the U.S., Israel, and Iran have intensified market volatility, particularly as attacks on energy and petrochemical infrastructure continue across the region. Stock futures firmed on Friday as comments from Israeli Prime Minister Benjamin Netanyahu suggested the U.S.–Iran conflict may de‑escalate, after he indicated Israel was helping U.S. efforts to reopen the Strait of Hormuz and asserted that Iran had lost key nuclear and missile capabilities—signals that helped markets recover from Thursday’s earlier declines. Market volatility is anticipated on Friday from the ‘Triple Witching’ event, where approximately $5.7 trillion in options are set to expire.
- The Bureau of Labor Statistics reported 0.7% inflation in Producer Price Index (PPI) and 0.5% in core PPI in February, suggesting elevated higher-for-longer inflation pressure on businesses and consumers. Annual PPI inflation was at 3.4%, the highest in a year while core was at 3.9%.
- The Federal Open Market Committee held the benchmark federal funds rate steady at 3.5%–3.75% after assessing inflation dynamics, economic growth, energy shocks and labor‑market conditions. Policymakers projected one rate cut in 2026 and another in 2027. While the Fed anticipates higher inflation alongside continued economic expansion, Chair Jerome Powell dismissed characterizations of the U.S. outlook as stagflation.
- Uber announced its plans to invest up to $1.25 billion Rivian and purchase autonomous versions of its electric vehicles to support its plans aimed at deploying up to 50,000 robotaxis across multiple countries by 2031.
- Bloomberg has reported plans by banking giant HSBC to cut its workforce by 20,000 by 2031 and leverage artificial intelligence (AI) to optimize operations and costs.
- Meta stock price rose after Reuters reported that Meta is considering laying off up to 16,000 jobs, 20% of its workforce.
- Micron stock pulled back despite reporting a higher-than-expected adjusted EPS of $12.2 on a 200% higher revenue of $23.9 billion driven by AI demand, in the fiscal second quarter.
- Nvidia CEO Jensen Huang has projected over $1 trillion in sales of its Vera Rubin and Blackwell systems in the next two years.
Fixed Income
- The Bloomberg U.S. Aggregate Bond Index edged up over the week.
- The U.S. 10-year Treasury yield rose to 4.277% and the yield on the 2-year note jumped to 796%, reflecting heightened inflation expectations and the Federal Reserve’s decision to maintain its policy rate, prompting investors to further scale back exposure to risk assets.
- The U.S. Dollar Index edged lower to 99.43 over the week as the market digested the Fed’s hawkish stance.
