16th March 2026

U.S.

Stock Market Performance:

• Major U.S. stock indexes declined for the third consecutive week amid ongoing conflict in the Middle East and resulting volatility in global oil markets.

• Oil prices fluctuated significantly throughout the week as investors assessed the likelihood of prolonged supply disruptions through the Strait of Hormuz, a key global oil shipping route.

• Markets also reacted to intermittent signals suggesting the possibility of de-escalation in the conflict, contributing to swings in energy prices and investor sentiment.

• Additional uncertainty stemming from concerns about stress in private credit markets weighed on investor confidence.

• Ongoing developments in trade policy also contributed to a cautious market environment.

• Among major U.S. indexes, the S&P MidCap 400 Index led declines, falling by 2.03%.

• The Dow Jones Industrial Average also posted notable losses, declining by 1.99%.

• The Nasdaq Composite Index performed comparatively better but still fell by 1.26%.

Inflation and Economic Growth Data:

• The Bureau of Labor Statistics reported that the February core consumer price index (CPI), which excludes food and energy prices, increased by 0.2% month on month.

• The increase matched consensus forecasts and represented a moderation from the 0.3% rise recorded in January.

• On an annual basis, core CPI remained unchanged at 2.5%.

• Headline CPI increased by 0.3% during February on a monthly basis.

• Year-on-year headline CPI rose by 2.4%.

• The Bureau of Economic Analysis reported that the core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, increased by 0.4% in January.

• The monthly increase was broadly in line with market expectations.

• The annual core PCE inflation rate rose unexpectedly to 3.1%.

• This represented the highest annual core PCE inflation level since early 2024.

• The Bureau of Economic Analysis also reported that economic growth in the fourth quarter of 2025 was slower than initially estimated.

• The second estimate showed that U.S. gross domestic product (GDP) expanded at an annualised rate of 0.7%.

• This was significantly lower than the initial estimate of 1.4% growth.

• The downward revision reflected weaker exports.

• Consumer spending growth was also revised lower.

• Government spending contributed less to economic growth than previously estimated.

• Business investment also came in weaker than originally reported.

Housing Market Developments:

• The National Association of Realtors reported that existing home sales increased by 1.7% in February compared with the previous month.

• Existing home sales reached a seasonally adjusted annualised rate of 4.09 million units.

• This figure exceeded both consensus expectations and January’s revised sales pace.

• The median price of existing homes increased by 0.3% compared with the same period a year earlier.

• The median existing home price reached USD 398,000.

• Housing affordability conditions improved for the eighth consecutive month.

• The National Association of Realtors’ Housing Affordability Index reached its highest level since March 2022.

• Despite the improvement, the organisation noted that housing market activity remains well below pre-pandemic levels.

• Lawrence Yun, Chief Economist at the National Association of Realtors, stated that significant progress is still required before transaction activity returns to levels seen before the pandemic.

• Separate data from the U.S. Census Bureau showed that privately owned housing starts reached a seasonally adjusted annualised rate of 1.487 million units in January.

• Housing starts increased by 7.2% compared with December’s revised level.

• Compared with January 2025, housing starts were 9.5% higher.

Bond Market Developments:

• U.S. Treasury securities generated negative returns during the week.

• Rising geopolitical risks, particularly uncertainty surrounding the duration of the Middle East conflict and its potential impact on energy markets, pushed Treasury yields higher across most maturities.

• Inflation data that appeared firmer than expected also contributed to upward pressure on yields.

• Bond prices move inversely to yields, meaning that rising yields resulted in falling bond prices.

• Investment-grade corporate bonds underperformed U.S. Treasuries during the week.

• Market participants observed a surge in new issuance within the investment-grade corporate bond market.

• According to traders at T. Rowe Price, the week represented the second largest issuance week ever recorded in the investment-grade bond market.

• The high-yield bond market experienced significant volatility.

• Fluctuations in macroeconomic headlines and movements in energy prices contributed to instability in lower-rated corporate debt markets.

Europe

Stock Market Performance:

• European equity markets declined slightly during the week amid elevated uncertainty and market volatility.

• The pan-European STOXX Europe 600 Index fell by 0.47% in local currency terms.

• Investor attention focused heavily on developments in the Middle East conflict and its potential duration.

• Market participants also monitored energy price trends and their potential implications for economic growth across Europe.

• Germany’s DAX Index declined by 0.61%.

• Italy’s FTSE MIB Index recorded gains, rising by 0.37%.

• France’s CAC 40 Index fell by 1.03%.

• The United Kingdom’s FTSE 100 Index declined by 0.23%.

ECB Response to Energy Price Pressures:

• European Central Bank President Christine Lagarde stated that the institution stands ready to take necessary measures to maintain control over inflation.

• Rising energy prices were highlighted as a key inflation risk facing the eurozone economy.

• Lagarde indicated that the European economy is currently better positioned to absorb energy shocks than in previous years.

• However, she emphasised that economic uncertainty and financial market volatility remain elevated.

German Industrial and Trade Data:

• German factory orders declined sharply in January.

• Orders fell by 11.1% compared with the previous month.

• The decline was significantly larger than economists’ expectations, which had predicted a drop of approximately 4%.

• Domestic demand was particularly weak, falling by 16.2%.

• Foreign orders also declined, decreasing by 7.1%.

• Separate data indicated that German exports fell by 2.3% month on month in January.

• The export decline was larger than expected by analysts.

• Despite weaker exports, Germany’s trade surplus widened.

• The increase in the surplus occurred because imports fell by an even greater amount.

Eurozone Industrial Production:

• Industrial production across the eurozone declined by 1.5% in January compared with the previous month.

• Economists had expected industrial output to increase by approximately 0.6%.

• The decline represented the largest monthly contraction since April 2025.

• The fall in production was driven primarily by reduced output in nondurable goods.

• Production of capital goods also declined significantly.

United Kingdom Economic Growth:

• The United Kingdom’s economic growth unexpectedly stalled in January.

• Data from the Office for National Statistics showed that gross domestic product recorded no growth during the month.

• Economists had expected growth of approximately 0.2%.

• The weak reading followed a modest expansion of 0.1% recorded in December.

• Output in the services sector, which represents the largest portion of the UK economy, also recorded no growth during January.

• Positive contributions from wholesale and retail trade were offset by declines in administrative and support service activities.

Japan

Stock Market Performance:

• Japanese equity markets declined during the week.

• The Nikkei 225 Index fell by 3.24%.

• The broader TOPIX Index declined by 2.36%.

• Investors closely monitored developments in global energy markets.

• Disruptions linked to Iran around the Strait of Hormuz increased concerns about potential oil supply shortages.

• The Strait of Hormuz represents a crucial shipping route for global crude oil supplies.

• Rising oil price volatility raised concerns for Japan’s economy due to the country’s heavy dependence on energy imports from the Middle East.

• Higher oil prices could increase domestic energy costs and contribute to inflationary pressures.

Government Response to Energy Risks:

• Prime Minister Sanae Takaichi announced measures to mitigate the potential impact of oil supply disruptions.

• Japan will release part of its strategic oil reserves.

• These reserves are jointly held by both private companies and the government.

• The release is intended to help stabilise domestic energy supply.

• The government also plans to introduce subsidies aimed at limiting increases in domestic petrol prices.

Bond Market and Currency Developments:

• The yield on the 10-year Japanese government bond rose to 2.22%.

• The yield had been 2.15% at the end of the previous week.

• The rise in yields brought them close to their highest level in approximately one month.

• Investors expressed concern that a weaker yen could increase the cost of imported goods.

• Rising oil prices could further amplify these import cost pressures.

• The ongoing conflict in the Middle East has created uncertainty regarding Japan’s economic outlook.

• The Bank of Japan is widely expected to maintain its current interest rate policy during its meeting scheduled for 18–19 March.

Currency Market Developments:

• The Japanese yen weakened to approximately JPY 159.5 per U.S. dollar.

• The currency had traded around JPY 157.8 per dollar at the end of the previous week.

• The yen approached its weakest levels since July 2024.

• In July 2024, Japanese authorities intervened directly in currency markets to support the yen.

• The recent depreciation has led to speculation that another intervention could occur.

• For the moment, authorities have limited their response to verbal warnings.

• Finance Minister Satsuki Katayama stated that the government is prepared to take all necessary steps in foreign exchange markets if required.

• Officials highlighted sharp market swings driven by oil prices as a key concern.

• Policymakers also emphasised the impact currency movements can have on household purchasing power and living standards.

Economic Growth Revision:

• Japan’s economic growth in the fourth quarter of 2025 was revised higher.

• The economy expanded at an annualised rate of 1.3%.

• The previous preliminary estimate had indicated growth of only 0.2%.

• The revised figure also marked a recovery from the 2.6% contraction recorded in the third quarter.

• Stronger business investment contributed to the upward revision.

• Higher levels of consumer spending also supported the improved growth estimate.

China

Stock Market Performance:

• Chinese equity market performance was mixed during the week.

• The CSI 300 Index, which tracks major companies listed in mainland China, rose by 0.19%.

• The Shanghai Composite Index declined by 0.70%.

• In Hong Kong, the Hang Seng Index fell by 1.13%.

Inflation Trends:

• Consumer inflation accelerated to its fastest pace in more than three years.

• Increased spending during the Lunar New Year holiday supported higher demand for travel and tourism services.

• The consumer price index rose by 1.3% in February compared with the same month a year earlier.

• Core inflation, which excludes volatile food and fuel prices, increased by 1.8% year on year.

• This represented the highest level of core inflation since March 2019.

• Despite rising consumer prices, producer prices remained in deflation.

• Producer prices have now declined for 41 consecutive months.

• However, the pace of decline slowed and reached its mildest level since July 2024.

• Higher prices for metals and oil contributed to moderating the pace of producer price deflation.

Trade and Export Growth:

• Chinese exports increased sharply during the January–February period.

• Export growth reached 21.8% compared with the same period a year earlier.

• The increase significantly exceeded analysts’ expectations.

• Strong global demand for technology products and electronic goods contributed to the surge in exports.

• The global artificial intelligence boom has increased demand for advanced computing hardware and related components.

• China reports combined trade data for the first two months of the year in order to reduce distortions caused by the Lunar New Year holiday timing.

• Although exports to the United States declined, this was offset by stronger exports to the European Union and Southeast Asian markets.

• Chinese imports increased by 19.8%.

• The strong growth in imports and exports resulted in China’s trade surplus reaching a record USD 213.6 billion.

Technology Sector Developments:

• Chinese technology stocks rose following increased adoption of a new artificial intelligence tool called OpenClaw.

• OpenClaw is an open-source AI agent capable of autonomously carrying out complex tasks.

• The technology has generated investor interest in the next stage of artificial intelligence development.

• Market focus is shifting from conversational chatbots toward autonomous systems capable of decision-making and execution.

• Companies viewed as early adopters or infrastructure providers for the technology experienced gains in their share prices.

• However, these gains moderated later in the week.

• Some banks, brokerage firms, and government agencies expressed caution about the use of the technology.

• Several organisations moved to restrict employee access to the AI system due to potential operational and security concerns.

Other Key Markets:

Geopolitical Developments and Energy Market Risks:

• Escalating geopolitical tensions involving Iran significantly influenced global financial markets.

• Energy markets were the primary transmission channel through which the conflict affected the global economy.

• Increased threats to shipping around the Strait of Hormuz raised concerns about oil supply disruptions.

• Attacks on vessels in Gulf waters heightened fears regarding the stability of major energy transport routes.

• The Strait of Hormuz represents one of the most critical chokepoints in global energy trade.

• Approximately one-fifth of global oil consumption passes through the Strait of Hormuz.

• Disruptions to shipping routes increased concerns about the reliability of Middle Eastern oil supplies.

• As a result, a geopolitical risk premium was added to global oil prices.

Emergency Energy Market Measures:

• The International Energy Agency coordinated a large-scale emergency release of strategic oil reserves.

• Approximately 400 million barrels of oil reserves were released.

• The coordinated action aimed to stabilise global energy markets.

• The scale of the release reflected the severity of potential supply disruptions linked to the conflict.

• The intervention also highlighted the central role that energy markets play in transmitting geopolitical shocks to the broader global economy.

Oil and Commodity Market Movements:

• Energy markets reacted rapidly to escalating geopolitical tensions.

• Oil prices surged as traders priced in potential supply disruptions from the Middle East.

• Brent crude oil experienced one of the largest daily price increases on record.

• Prices briefly approached approximately USD 120 per barrel on Monday.

• Oil prices later retraced part of these gains but remained elevated.

• Even after the announcement of strategic reserve releases, prices stayed relatively high.

• This suggested that investors believed the reserve releases would only partially offset supply risks.

• The rise in oil prices also affected related commodity markets.

• Biofuel feedstocks, including palm oil and soybean oil, increased in price.

• Higher oil prices can increase demand for alternative fuel inputs.

• Industrial commodities also experienced upward pressure.

• Rising energy costs and shipping disruptions raised concerns about broader supply chain impacts.

Government Policy Responses to Rising Energy Costs:

• Several governments introduced policy measures to reduce the economic impact of rising energy prices.

• In Brazil, policymakers reduced fuel taxes for domestic consumers.

• At the same time, taxes on crude oil exports were increased.

• The policy aimed to limit the domestic inflationary impact of higher oil prices while capturing additional revenue from stronger export prices.

• Indonesia indicated that it would absorb much of the increase in global oil prices through government spending.

• The Indonesian government plans to expand fuel subsidies and compensation payments to state-owned energy companies.

• The objective is to keep domestic fuel prices relatively stable.

• Countries with high energy import dependence have been particularly affected by rising oil prices.

• Higher energy costs can place pressure on government budgets, trade balances, and household finances.

• In Egypt, authorities increased prices for multiple fuel products.

• Price increases applied to petrol, diesel, and natural gas used for vehicles.

• The changes reflected higher domestic energy costs resulting from disruptions to Middle Eastern energy supply.

• South Korea indicated that stronger-than-expected tax revenues may be used to extend financial support measures.

• These measures aim to reduce the impact of higher oil prices on households and businesses.

PLEASE NOTE:

This content is for informational purposes only and should not be construed as investment advice or a specific recommendation to act on any investment. It is importnat to assess your own circumstances before making investment decisions. The views expressed are as of the date indicated and whilst we believe the information is from reliable sources, we do not guarantee it’s accuracy. Past performance is not indicative of future results, and all investments carry market risks, including the potential loss of the principal.