Oil at Record Pace, Labour Market Cracks, and Iran’s Leadership Transition
Executive Summary
The U.S.–Israeli war on Iran dominated the week. The Strait of Hormuz — which roughly 20% of the world’s oil flows through was effectively closed, sending oil prices to their biggest weekly gain on record. The S&P 500 fell 2%, the Dow erased all its 2026 gains, and Europe and Japan sold off hard. A weak U.S. jobs report added to the pressure. China and crypto held up better than most. By Sunday evening, oil had crossed $100 per barrel and Iran had named a new Supreme Leader, setting up a turbulent Monday open.
Market Snapshot
Weekly performance across major global indices (week ending 6 March 2026):
| Index | Friday’s Closing Price | Weekly Change | Direction |
| DJIA | 47,501.55 | -3.01% | ▼ |
| S&P 500 | 6,740.02 | -2.02% | ▼ |
| NASDAQ Composite | 22,387.68 | -1.24% | ▼ |
| FTSE 100 (UK) | 10,284.75 | -5.74% | ▼ |
| CAC 40 (France) | 7,993.49 | -6.84% | ▼ |
| STOXX Europe 600 | 598.69 | -5.55% | ▼ |
| Nikkei 225 (Japan) | 55,620.84 | -5.49% | ▼ |
| CSI 300 (China) | 4,660.44 | -1.41% | ▼ |
| Hang Seng (Hong Kong) | 25,757.29 | -3.28% | ▼ |
| Brent Crude | 92.69 / bbl | +27.88% | ▲ |
| Gold | 5,146.10 / oz | -0.90% | ▼ |
Foreign Exchange
For the week ending 6 March 2026
| Pair | Friday’s Close | Week’s Change |
| EUR/USD | 1.1608 | – 0.0165 (-1.65%) |
| USD/JPY | 157.534 | +0.0107 (+1.07%) |
| GBP/USD | 1.3357 | -0.0099 (-0.99%) |
| USD/CHF | 0.7807 | +0.0097 (+0.97%) |
| AUD/USD | 0.7011 | -0.0128 (-1.28%) |
U.S. Markets Overview
Equities & Geopolitical Volitility
U.S. Stock indices finished a volatile week lower as investors digested escalating conflict in the Middle East following the U.S. And Israeli military strikes on Iran. The S&P 500 fell approximately 2.0% to close at 6,740, while the DJIA declined roughly 3.0% and is now down about 1.2% YTD. The S&P MidCap 400 Index performed worst among major indexes, shedding 4.61%, followed by the Russell 2000. The Nasdaq Composite held up relatively better but still declined 1.24%. Energy-related equities showed relative strength amid surging oil prices.
Jobs Data & Federal Reserve Outlook
The February nonfarm payroll report delivered a significant surprise: the U.S. The economy lost 92,000 jobs, well below expectations for a gain of around 60,000, while the unemployment rate ticked up to 4.4%. This weaker labour data complicates the Federal Reserve’s policy calculus, as policymakers now balance signs of the labour market cooling against potential inflation pressures from rising energy prices. Earlier in the week, ISM data had pointed to continued economic expansion, with both manufacturing and services PMIs above 50. Treasury yields moved higher as investors reassessed inflation risks and the outlook for Federal policy.
European Markets
European equities posted sharp declines after several consecutive weeks of gains. The pan-European STOXX Europe 600 Index fell 5.55% in local currency terms. Germany’s DAX declined 6.70%, France’s CAC 40 retreated 6.84%, Italy’s FTSE MIB fell 6.48%, and the UK’s FTSE 100 lost 5.74%.
Rising energy prices fueled concerns about inflation and growth. Eurostat data showed eurozone annual inflation at 1.9% in February, above both January’s 1.7% and market expectations. Market pricing shifted, with traders increasing the probability of potential European Central Bank rate hikes. On a positive note, the eurozone unemployment rate fell to a record low 6.1% in January. Italy reported modest Q4 GDP growth of 0.3% and a decline in its unemployment rate to 5.1%.
Asian Markets
Japan
Japan’s equity markets fell sharply, with the Nikkei 225 declining 5.49% and the broader TOPIX Index down 5.63%. Investors assessed the potential impact of higher crude oil prices on domestic inflation, given Japan’s reliance on energy imports from the Gulf region.
Bank of Japan Governor Kazuo Ueda noted that depending on how the Middle East situation unfolds, the impact on Japan’s economy could be significant. The 10-year Japanese government bond yield rose to 2.15% from 2.12% the prior week. In currency markets, the yen weakened to approximately JPY 157.6 against the U.S. dollar from around 156.1, with Finance Minister Satsuki Katayama stating authorities were monitoring the move with urgency.
China
China’s equity markets retreated but showed relative resilience. The onshore CSI 300 Index declined 1.07%, the Shanghai Composite fell 0.93%, and Hong Kong’s Hang Seng Index slid 3.28%.
At the National People’s Congress, China set a 2026 GDP growth target range of 4.5% to 5.0%, the lowest since at least the 1990s. Policymakers signaled continuity in strategic priorities around technology self-sufficiency and advanced manufacturing. Fiscal measures included plans for local governments to issue CNY 4.4 trillion in special purpose bonds and CNY 1.3 trillion in ultra-long sovereign debt.
Commodities
Oil
Oil prices surged amid concerns about potential supply disruptions from the Middle East escalation. The Strait of Hormu – a critical chokepoint through which roughly one-fifth of global oil consumption transits, became a focal point for market attention. According to T. Rowe Price analysis, the oil market entered this episode with modest oversupply and spare capacity, suggesting the initial price move reflected a geopolitical risk premium as much as confirmed physical disruption.
Gold
Gold dipped slightly during the week, settling near $5,100 per ounce, as a stronger U.S. dollar briefly offset safe-haven buying. The weak jobs data brought it back toward highs by Friday. Gold is still up around 27% year-to-date, making it one of the best-performing assets of 2026.
Regional Summary
| Region | Summary |
| United States | Oil shock, weak payrolls (-92K), Dow erases 2026 gains. Tech software rebounds; chips fall. |
| Europe | Broad risk-off selloff; energy import dependency weighs heavily. FTSE 100 -5.7%, CAC 40 -6.8%. |
| Japan | Nikkei -5.5%; yen weakened modestly to ~157.6/USD. JGB yields edged higher. BoJ maintains a conditional tightening stance. |
| China | Modest outperformance; NPC sets 4.5-5% GDP target. CSI 300 ~-1.5%. Hormuz disruption is key risk. |
| Commodities | Oil biggest weekly gain since 1983. Brent +28%, WTI +36%. Hormuz near-zero traffic. Gold ~$5,100. |
| Crypto | Bitcoin stabilised ~$70K midweek; closed ~$68K. Outperformed equities relatively. ETF inflows $1.1B. |
Week Ahead
Markets remain focused on two critical variables: (1) whether energy flows through the Strait of Hormuz remain uninterrupted, and (2) the duration and scope of the Middle East conflict. If supply disruptions prove temporary, the current oil price premium may fade; persistent disruption could reinforce global inflation pressures.
In the U.S., the Federal Reserve faces a challenging environment with mixed labor signals and energy-driven inflation risks. In Japan, authorities are monitoring yen volatility closely. In Europe, shifting ECB expectations adds another layer of uncertainty. Investors should anticipate continued volatility as geopolitical and economic data evolve.
Disclaimer
This report has been prepared for information purposes only. It is not intended to be, and should not be relied on as, financial product advice, investment advice, legal advice, taxation advice or a recommendation. It does not take into account the objectives, financial situation or needs of any person. Before acting on any information in this report, consider its appropriateness and seek independent professional advice where necessary.
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