The week of 2 to 6 March began as a geopolitical story and ended as a full market repricing. As tensions involving Iran escalated and disruption around the Strait of Hormuz pushed energy prices sharply higher, investors were forced to reassess inflation, growth and the path of central bank policy.
That shift was felt across asset classes. Equities swung between relief rallies and renewed selloffs, bond yields moved higher, volatility stayed elevated and the US dollar regained safe-haven support. By the end of the week, markets were no longer treating the conflict as a regional event, but as a potential global inflation and growth shock.
In the US, markets spent the week reacting to oil, yields and geopolitics rather than following a clean earnings-led script. The S&P 500 was roughly flat on 2 March, fell 0.9% on 3 March, rebounded 0.8% on 4 March, and then lost momentum again as oil prices rose and the labour-market backdrop softened into week-end. Technology names still offered selective support, with AI-linked companies such as Nvidia, AMD, Broadcom and Marvell attracting buying interest on company-specific developments, but that leadership was not enough to stabilise the broader market.
Outside the US, the Iran shock was even more visible. European equities were hit by renewed concerns over imported energy costs, with the STOXX 600 falling 1.6% on 2 March and a further 3.1% on 3 March before a mid-week rebound. The FTSE 100 was relatively more resilient thanks to its energy exposure, while continental markets were weighed down by industrials, transport and cyclicals. In Asia, South Korea saw the most violent swings, Japan remained vulnerable as an energy importer, and Hong Kong held up better as large-cap technology names offset some of the wider pressure.
Market pulse: equities increasingly traded as a function of oil, inflation and geopolitical risk rather than company fundamentals.
Across the week, options activity showed a clear preference for downside protection. Broad market positioning leaned defensive, with persistent hedging in index exposure and a more cautious tone in high-beta growth areas. The message from the largest growth stocks also deteriorated through the week, as investors increasingly favoured defensive structures over straightforward upside participation.
The more nuanced picture appeared in energy and metals. In energy, investors still showed willingness to own upside in selected names, but broad sector exposure remained hedged. In metals, positioning stayed constructive, particularly in miners, but was paired with downside protection in the large precious-metals ETFs. Taken together, the signal was not capitulation. It was a market that remained invested, but wanted much more insurance.
Market pulse: investors did not abandon risk, but they consistently paid to protect against further instability.
The week’s volatility profile stayed elevated throughout. The VIX closed at 21.44 on 2 March, rose to 23.57 on 3 March, eased to 21.15 on 4 March, and then closed Friday at 29.49 as the weekend escalation drove another round of demand for near-term hedges. Short-dated volatility measures remained firm, and downside skew stayed in place, showing that investors were still more focused on protection than on chasing a rebound.
That matters because the rise in volatility was not simply about equity weakness. It reflected uncertainty over energy supply, inflation and central-bank reaction functions. By Monday 9 March, options markets were implying a weekly move of nearly 2.9% in the S&P 500, while downside options remained richer than upside exposure, consistent with a market still bracing for unstable headlines.
Market pulse: volatility stayed high because the market saw Iran as an ongoing macro event, not a one-day shock.
Bitcoin and Ethereum were relatively stable through the week, with Bitcoin trading broadly between the high $67,000s and low $72,000s, while Ethereum held near the $2,000 to $2,130 range. Early in the week, ETF demand helped cushion the asset class, particularly in bitcoin exposure, but that support became less consistent as macro risk intensified.
By the end of the week, the tone had softened. Bitcoin ETF flows turned negative, while Ethereum exposure remained somewhat better supported. That left digital assets looking more resilient than some high-beta equity segments, but still sensitive to the same drivers affecting broader markets: oil, yields and risk appetite. The listed crypto ecosystem also remained under pressure as investors reduced exposure to more cyclical and momentum-driven pockets of the market.
Market pulse: crypto showed resilience, but ETF support softened rather than removed macro pressure.
US Treasury yields moved higher through much of the week as markets reassessed the inflation implications of rising oil and gas prices. The 10-year Treasury yield climbed from around 4.05% early in the week to roughly 4.14% by 6 March, while the 2-year yield moved back above 3.55%. That shift reflected a market becoming less confident that lower rates would arrive quickly if the energy shock proved persistent.
The same pattern appeared elsewhere. German Bund yields rose as Europe faced renewed imported-energy risk, UK gilt yields moved higher as inflation concerns returned, and Japan’s yield curve steepened as longer-dated government bonds came under pressure. Credit markets also reflected a more cautious tone, with high-yield spreads widening before partially retracing during the mid-week risk rebound.
Market pulse: fixed income markets treated Iran less as a growth scare and more as an inflation complication.
Energy dominated the week’s macro narrative. Brent crude rose sharply through the week and then surged at the Monday 9 March open, briefly nearing $120 a barrel as markets confronted the scale of disruption around the Strait of Hormuz and the risk of tighter supply in crude, diesel, jet fuel and LNG. Reuters reported that oil rose roughly 25% on 9 March, its highest level since mid-2022.
Natural gas and refined products reinforced the same message. European gas prices spiked early in the week, while broader commodity markets began to price in the inflationary effects of higher energy costs. Gold’s performance was more complex. It initially softened as the dollar strengthened and deleveraging hit hard assets, but the underlying strategic case for precious metals remained intact as markets weighed the risk of a broader stagflationary backdrop.
Market pulse: commodities were not a side story; they were the mechanism through which the conflict reached global markets.
Foreign-exchange moves were more orderly than those seen in equities or commodities, but the direction was still clear. The US dollar strengthened as investors sought liquidity and safety, with EURUSD falling toward 1.1530 during the week before stabilising near 1.1600. USDJPY also pushed toward the upper end of its recent range as higher energy prices and rising global yields complicated the yen’s safe-haven role.
Emerging-market currencies were more visibly pressured by weaker risk sentiment, while sterling also came under pressure as the oil shock raised questions for energy-importing economies. Reuters reported that sterling fell sharply on 9 March as the oil surge forced investors to reconsider the inflation outlook and the likely policy response.
Market pulse: in this phase of the shock, the dollar remained the market’s preferred shelter.
The coming week is heavy with macro and earnings catalysts, but the biggest issue is whether the oil spike proves temporary or starts to feed more deeply into inflation and rate expectations. That distinction matters because it will determine whether markets can continue to look through the conflict or whether earnings expectations and policy assumptions need to be revised lower.
The first major test is US CPI on Wednesday 11 March. That report arrives just before the next Federal Reserve meeting and will be watched closely for any sign that inflation was already proving sticky even before the latest energy surge. Later in the week, the PCE price index will offer a second important inflation checkpoint. If both releases stay firm, the market may conclude that the inflation problem is becoming broader than oil alone.
Earnings also matter. Oracle is due to report on 10 March and Adobe on 12 March, providing fresh read-through for AI spending, software demand and broader confidence in growth leadership. That matters because if core growth sectors start to wobble at the same time as oil stays elevated, the market backdrop becomes materially more fragile.
Housing, trade and consumer data will add texture, but the main checklist remains straightforward: oil, inflation, central-bank expectations and whether risk assets can continue to compartmentalise the conflict.
Market pulse: the week ahead will show whether this remains an energy shock or becomes a wider regime shift for markets.
What began as a geopolitical escalation involving Iran evolved into a broader repricing across oil, volatility, yields, currencies and equity risk. That matters because it changes how investors interpret every new headline. This is no longer only about regional instability. It is about whether the conflict injects a fresh inflation impulse into a market that was still hoping for lower rates and calmer conditions.
Markets did not respond with indiscriminate panic, but they did respond with a clear increase in hedging and a preference for selective exposure over broad conviction. That is usually what markets look like when investors still see opportunities, but trust the backdrop less with each passing day.
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