Markets stayed firmly in “oil‑shock, war‑risk” mode as the Middle East conflict and a closed or constrained Strait of Hormuz kept energy prices elevated, and inflation worries front and centre. At the same time, a run of softer US data (downward‑revised Q4 GDP, weak retail sales and durable goods) highlighted slowing growth, leaving central banks facing an awkward mix of higher energy‑driven inflation and weaker underlying momentum.
FX Market Reactions
The US dollar advanced about 1.3% on the week, supported by higher oil prices and safe‑haven demand, with analysts flagging ongoing upside risks for the greenback if the energy shock persists.
The euro remained broadly weak as Europe’s heavy energy‑import dependence and higher long‑term yields weighed on sentiment, while the yen firmed on verbal intervention from Japanese officials even as USD/JPY traded above 159 amid speculation of actual FX intervention.
The Australian dollar outperformed on expectations the RBA could turn more hawkish given stronger domestic growth and imported energy inflation, whereas high‑beta FX more generally stayed under pressure from risk aversion.
Commodities Market Reactions
Crude oil extended its surge, with Brent holding around or above 100 USD and an index tracking 26 major commodity futures up 11% on the month and 24% year‑to‑date, driven primarily by 40–50% gains in crude and refined fuels as supply concerns intensified.
Precious and industrial metals were mixed: gold hovered near 5,000 USD but saw bouts of profit‑taking as the stronger dollar and higher real yields offset safe‑haven interest, while copper and silver remained under pressure as the energy shock raised recession fears and prompted position trimming.
Agricultural commodities, including grains, soybeans and sugar, gained further support from their biofuel/ethanol link to rising energy prices and growing concerns over global food security.
Indices Market Reactions
Equity markets in North America and Europe fell again, with selling described as “orderly but persistent” as investors rotated further into energy and commodity‑linked exposures while de‑rating more rate‑sensitive and growth sectors.
Long‑term European bond yields hit their highest weekly close since 2011, adding pressure to European equities, while Asia also slipped as higher energy costs and rate worries tightened risk appetite despite some resilience in digital assets like Bitcoin.
Fertiliser and energy names were notable winners, with companies such as Nutrien, CF Industries, and Mosaic up double‑digits on the week as investors priced in higher input prices and supply disruptions.
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