Oil Surge Fuels Stagflation Fears as Brent Crude Breaks Above $100

Market Overview

Global markets were gripped by stagflation concerns yesterday, as escalating tensions between the U.S. and Iran fueled fears that a sharp spike in oil prices could significantly undermine global economic growth. The sell-off in U.S. equities intensified, with both the Dow Jones Industrial Average and the Nasdaq 100 entering correction territory. Meanwhile, the S&P 500 and Nasdaq Composite fell to their lowest levels in nearly eight months.

Since the outbreak of the U.S.-Iran conflict, all three major U.S. indices have declined for five consecutive weeks, marking the longest losing streak in nearly four years. In parallel, the cybersecurity sector came under heavy pressure after security risks emerged in Anthropics AI model. Tenable plunged nearly 10%, while related ETFs dropped by approximately 4.5%.

Precious Metals & Cryptocurrencies

Extreme risk-off sentiment provided strong support for precious metals. Spot gold staged a sharp intraday rebound of over 4%, with bulls demonstrating strong defensive positioning below the $4,500 level.

In contrast, cryptocurrencies weakened amid tightening liquidity conditions. Bitcoin fell below the $66,000 mark intraday, dropping approximately 5% from its daily high.

Energy & Technology

The energy sector emerged as the sole safe haven, posting gains of more than 6% for the week. Brent crude rose over 4%, reaching its highest level since the Russia-Ukraine conflict in 2022 and extending its rally to six consecutive weeks.

Technology stocks remained under pressure, with Meta leading declines after plunging 10% over the week.

Fixed Income & FX Markets

The bond market experienced a sharp sell-off, pushing the U.S. 10-year Treasury yield up to 4.49%, its highest level in eight months.

The U.S. Dollar Index recorded its fourth consecutive gain. Meanwhile, the Japanese yen weakened past the 160 level against the dollar for the first time in two years, hitting a near two-year low. The offshore Chinese yuan briefly fell below 6.92 before rebounding, signaling increased regulatory intervention.

Asia Market Trends

Asian markets showed relative resilience. The Shanghai Composite Index climbed back above 3,900, driven by strong rallies in pharmaceutical and lithium battery sectors, both of which saw multiple stocks hit daily limit-ups. The Hang Seng Index closed higher amid volatility, with biotech stocks leading gains.

However, early Monday trading saw U.S. equity futures open lower across the board, while Brent crude surged over 3% at the open, indicating that risk-off sentiment remains firmly in place.

Hot Topics to WatchAsian Refineries Shift Away from Dubai Crude Benchmark

Dubai crude prices surged to a historic high of nearly $170 per barrel, far exceeding Brent at $103, prompting Asian refiners to accelerate their shift in procurement benchmarks from Dubai crude to Brent.

The Japanese government has also taken the rare step of intervening, urging domestic wholesalers to adopt Brent-based pricing in an effort to curb rising fuel costs. This shift could weaken liquidity in Middle Eastern benchmark derivatives and exert long-term pressure on pricing mechanisms used by major suppliers such as Saudi Aramco.

Japan Signals Potential FX Intervention

The Japanese yen is once again approaching the critical 160 threshold. Finance Minister Katsunobu Kato issued a strong warning, stating that “bold measures” would be taken if necessary—a phrase historically associated with imminent intervention.

Authorities are also reportedly considering unconventional measures, including deploying foreign exchange reserves to short oil prices directly, in an effort to stabilize the yen.

Key Events to Watch

22:30 (US)

Dallas Fed Manufacturing Business Index (March)

Overnight

04:00 (US)

Speech by John Williams, Permanent FOMC Voter and President of the New York Fed