The 17–23 March week sat at the crossroads of war risk, central‑bank signalling, and still‑elevated energy prices. The Fed, ECB and other major central banks kept rates on hold but adopted a slightly more hawkish tone, highlighting inflation risks from the Middle East conflict just as oil stayed high and growth signals softened further.
FX Market Reactions
The US dollar ended the week slightly lower on the broad indices, as initial post‑FOMC strength faded and markets judged the Fed as cautious but not aggressively hawkish.
The yen remained weak after the Bank of Japan signalled no rush to tighten further, keeping USD/JPY elevated and making JPY one of the funding currencies of choice.
Sterling and the euro both struggled under stagflation concerns and Europe’s heavy energy‑import bill, while high‑beta FX like AUD benefitted from the RBA’s earlier hike and the tentative rebound in risk sentiment mid‑week.
Commodities Market Reactions
Brent crude held near triple‑digit levels after its earlier spike, with a mid‑week bounce as the Iran war dragged into a third week and Hormuz disruption risk stayed in focus.
A 3% rise in the Bloomberg Commodity Index was driven mainly by an approximately 18% surge in Brent, while metals mostly fell as higher inflation and weaker growth expectations weighed on positioning.
Grain futures saw an aggressive build‑up in net long positioning to a four‑year high, as weather risks, biofuel demand and rising input costs encouraged funds to rotate more heavily into agriculture.
Indices Market Reactions
Global equities extended their correction. US benchmarks were on track for a fourth consecutive negative week, with energy and defensives outperforming more cyclical and rate‑sensitive sectors.
The S&P 500 is only down low‑single digits from its highs, but beneath the surface dispersion is widening sharply: energy is up about 33% year‑to‑date while software is down roughly 20%, a pattern that is insulating the headline index but masking significant single‑stock volatility.
European and UK markets also closed lower as higher bond yields and expensive energy squeezed margins, while Asian equities sold off sharply on rising energy and rate fears despite pockets of strength linked to better Chinese data.
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