Weekly Market Wrap Up: Market Volatility and labour Weakness behind sharp turmoil

Last week marked one of the most turbulent periods for global markets in recent years. Investor sentiment was dominated by escalating conflict in the Middle East, while the week ended with a U.S. employment report that sharply missed expectations.

Military confrontations between the United States and Israel on one side, and Iran on the other, entered their eighth day. Israel intensified its air campaign, with the military reporting that over 80 fighter jets carried out wide-scale strikes targeting Iranian military infrastructure in Tehran and other regions.

Iran responded with drone attacks on Israeli and U.S. positions, while reports indicated Hezbollah fired rockets from Lebanon toward Israel.

U.S. Equities

Equity markets were hit by a perfect storm. Oil prices surged following the outbreak of conflict, fuelling fears of renewed inflation. At the same time, a weaker-than-expected U.S. jobs report raised concerns about slowing growth.

This stagflation mix sent global equities lower, as investors questioned whether the Federal Reserve would be willing to cut interest rates in such an environment.

Broad-based selling in both stocks and bonds reflected a clear risk-off mood. Despite the turmoil, the S&P 500 remains up 17% over the past year and just 3% below its all-time high.

Historically, geopolitical shocks tend to have short-lived market impacts and can even present buying opportunities.

The long-term outlook for corporate earnings and economic growth remains constructive—unless oil prices rise sharply and persistently.

U.S. Dollar and Employment Data

The U.S. Dollar Index edged up to 99.01 from 98.98 the previous week, peaking at 99.41.

The dollar benefited from geopolitical uncertainty and growing doubts about the health of the U.S. labor market. February’s jobs report was significantly weaker than expected, showing just 92,000 nonfarm jobs added and a rise in unemployment.

Despite the slowdown in hiring, wage growth remained strong—complicating the Fed’s policy outlook.

This divergence highlights a labor market out of balance: companies are cautious about hiring but still forced to offer higher wages to attract or retain workers.

The Fed cannot yet be confident that inflation is on a sustainable downward path.

Oil: Historic Surge

The spike in oil prices last week poses risks beyond energy costs—it could reshape global monetary policy.

The conflict between the U.S. and Iran, coupled with shipping disruptions in the Strait of Hormuz, triggered a historic rally.

West Texas Intermediate jumped 35% to $90.90 per barrel—its biggest weekly gain since futures trading began in 1983.

Brent crude rose 28% to $92.69, the largest weekly increase since April 2020. Qatar’s energy minister warned that oil could reach $150 per barrel in the coming weeks, potentially triggering global economic instability.

Production cuts are already underway, with Iraq halting 1.5 million barrels per day and Kuwait reducing output due to full storage capacity.

JPMorgan estimates total cuts could reach 6 million barrels per day if the Strait remains closed.

Gold

Gold posted losses last week despite a sharp drop in risk appetite.

The decline was driven by profit-taking after historic highs and a stronger dollar supported by Middle East tensions.

Bitcoin: Rally Interrupted

Bitcoin had one of its strongest weeks in months, briefly touching $74,000 before falling below $70,000. Optimism surged as crypto’s integration with traditional finance deepened.

Key developments included Morgan Stanley naming Bank of New York Mellon as custodian for its spot Bitcoin ETF, Kraken gaining access to the Federal Reserve’s payment system, and ICE (owner of the NYSE) investing $25 billion in OKX.

President Trump also urged banks to build practical relationships with the crypto sector.

Despite the momentum, Bitcoin’s rally stalled due to a stronger dollar and expectations of sustained high interest rates—both of which dampen appetite for risk assets.

Looking Ahead

Geopolitical tensions between the U.S., Israel, and Iran are expected to persist. If the conflict escalates, oil prices may continue rising, putting pressure on equities and inflation expectations.

A stronger dollar could weigh on gold and cryptocurrencies.

Markets face a busy week of economic data and corporate earnings, including February CPI, January PCE, housing data, trade figures, and consumer sentiment.

Tech earnings will be closely watched, with results from Oracle, Hewlett Packard Enterprise, and Adobe offering insight into demand for software and AI infrastructure. Retail and EV sectors will also be in focus, with updates from Dollar General, Campbell, Ulta, Petco, and Chinese EV makers Li Auto and Nio.