9 min readWeekly recap:
US global stocks recap
US stocks ended lower after a volatile week shaped by geopolitical tensions, wild swings in oil prices, persistent inflation worries, and a hawkish interpretation of the FOMC meeting.
The Dow Jones fell 2.1% while the Nasdaq tumbled 2.07% and the S&P500 fell 1.3%. Treasury yields moved higher, and the USD fell 1%.
Major US data/themes
The Federal Reserve left interest rates unchanged at 3.5% to 3.75%, as expected. However, the central bank acknowledged that the conflict has complicated policymaking, raising inflation worries. While the Fed still signals at least one rate cut this year, investors are less convinced, pushing expectations for easing out towards 2027.
The RBA hiked rates for a second straight meeting while the BoJ left rates unchanged at 0.7% bit adopted a more hawkish stance, supporting the yen.
Gold moves
Gold prices fell for an eighth straight session on Friday, taking the weekly decline to around 10.5% — the worst weekly drop since 1983. Gold, traditionally seen as a safe haven, has fallen each week since the start of the Iran conflict. Surging oil prices lifted inflationary pressures, prompting central banks to adopt a more hawkish stance.
The prospect of central banks, such as the Federal Reserve, keeping interest rates higher for longer to curb inflation weighed on demand for non-yielding gold. While Gold started the new week sharply lower, it has pared some of its losses after Trump announced good, productive talks with Iran, which pulled oil prices lower. Iran has not yet confirmed that the talks took place.
Looking ahead, traders will continue to monitor developments in Iran. Any signs that the US and Iran are progressing with talks could help to support gold prices.
Oil moves
Oil prices have been highly volatile. Brent rose to a peak of $119 per barrel before easing back to settle at $106, up almost 8% across last week, putting gains at 54% this month. Meanwhile, WTI fell by 0.4%, highlighting greater disruption to European oil markets than to US markets. Oil prices are falling at the start of the new week as investors react to developments with Iran.
President Trump posted that the US and Iran had productive talks over the weekend, easing fears of an escalating crisis. However, Iran has not yet confirmed this. Oil prices are falling sharply as the risk premium fades.
Indian markets
Indian equities experienced choppy trade last week, ending just modestly lower amid underlying caution from investors. The tone was positive in the first three sessions of last week as some Indian vessels transited the Strait of Hormuz, before a sharp decline on Thursday erased gains, with the Nifty ending 0.16% lower and the Sensex falling 0.4%.
This marked the fourth straight weekly decline, but also marked a sharp slowdown from the 5% losses seen in the previous week. The ongoing conflict in the Middle East, rising oil prices, the Rupee at a record low, and persistent foreign institutional outflows supported a bearish mood. These factors continue to weigh on Monday, with stocks sharply lower.
Foreign institutional investors (FIIs) have consistently been selling out of the Indian stock market, offloading Rs. 81262.5 crore so far in March. Last week, FIIs saw outflows of Rs. 29,718.9 crore.
Meanwhile, domestic institutional investors (DIIs) continue to support the market as net buyers, providing considerable support. DIIs saw net purchases of Rs. 30,269 crore.
India’s wholesale inflation rose 2.13% YoY in February, accelerating from 1.81% in January and exceeding economists’ expectations of a 2% gain. This marked the fastest rise since February last year. The data comes as CPI has remained below the RBI target range for the 45th consecutive month.
Key Indian market drivers: Investor sentiment will remain sensitive to geopolitical developments, particularly the impact on crude oil prices in the holiday-shortened week. Domestic exchanges will be closed on Thursday for the Shri Ram Navami public holiday. Foreign investor activity and PMI data are also expected to guide market direction.
USD/INR rose for a fifth straight week to a record high of 94.23 as the Indian currency continues to face significant pressure from consistent foreign outflows from the Indian stock market and higher oil prices.
Pakistan markets
Mounting geopolitical tensions, combined with soaring oil prices, fueled panic selling on the Pakistan Stock Exchange last week, dragging the KSE-100 index down by over 1%. As a net importer of oil, Pakistan is vulnerable to higher energy prices, which have fueled macroeconomic concerns and hit sentiment.
These factors will remain in focus this coming week. Signs of de-escalation will support risk sentiment.
USD/PKR was broadly unchanged at -0.05% last week, settling at 279.15.
Week ahead (US & Asia)
Japan CPI (Monday)
Japan’s CPI data follows the Bank of Japan’s decision to leave interest rates unchanged at 0.75% last week, while maintaining a hawkish tone.
Two board members voted for a rate hike to 1%, reflecting concerns about inflation, and BoJ Governor Ueda said he expected a strong outcome from the coming Spring wage negotiations, adding to the hawkish bias that helped boost the yen.
In January, headline and core CPI slowed to 1.5% and 2.0% respectively (from 2.1% and 2.4%), suggesting inflationary pressure from the previously weak yen has yet to materialise fully.
A further slowdown in February inflation could reduce urgency for an April rate hike and weigh on the yen. USD/JPY remains close to the 160.00 level, which is the perceived line in the sand for Japanese authorities to intervene.
Indian PMIs (Tuesday)
The PMIs will be the first timely insight into how the Middle East conflict and surging energy prices are impacting the Indian economy. Expectations are for Indian economic activity to grow at a slightly faster pace in March.
The manufacturing PMI is forecast to rise to 57.4, up from 56.9 in February, and the services PMI is set to rise to 58.3 from 58.1. As a result, the composite PMI, considered a good gauge of business activity, is set to rise to 59 in March from 58.9.
The level 50 separates expansion from contraction. Strong data could help to support sentiment. However, any weakness could unnerve investors and pull stocks and the Sensex lower.
US PMIs (Tuesday)
The Federal Reserve left rates unchanged last week but highlighted growing uncertainty due to the Middle East conflict. More policymakers now favour less easing than three months ago, with the number expecting no rate cuts this year rising to seven from four.
Markets have priced out rate cut expectations and are now pricing in 15 basis points of rate hikes. If PMI data shows that higher energy prices are hitting business activity, it would highlight the Fed’s dilemma: slowing growth alongside rising inflation. This would likely weigh further on U.S. stocks such as the S&P 500.
Australian CPI (Wednesday)
The Reserve Bank of Australia has been one of the few central banks to start tightening policy again. It raised rates in February, its first rate hike since November 2023 and carried out a back-to-back rate hike last week, citing persistent inflation risks and geopolitical uncertainty, while keeping the door open to further easing.
Markets are pricing in around a 60% probability of another 25-basis-point hike in May. This week’s CPI data will be closely watched — particularly if it shows sticky inflation, which would strengthen the case for further tightening and potentially boost AUD/USD.
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