Market Commentary: Thursday 19th March

Global equities declined for a second consecutive day as escalating conflict in the Middle East — particularly attacks on critical energy infrastructure — pushed oil prices sharply higher and heightened fears of renewed inflation.

MSCI’s global stock index fell 0.6%, with Asian markets hit harder, dropping 2.8% and led by a more than 3.5% plunge in Japan’s Nikkei 225. European and US futures also pointed lower after recent losses. Brent crude surged above $112 per barrel following strikes involving Iran and Israel, including damage to a major LNG facility in Qatar, raising concerns about prolonged disruptions to global energy supply.

The spike in oil prices has complicated the outlook for central banks, reinforcing expectations of “higher for longer” interest rates as inflation risks persist. The Federal Reserve and Bank of Japan both held rates steady, while traders reduced expectations for US rate cuts to less than one full reduction this year.

Bond yields rose, currencies like the Philippine peso weakened, and market volatility increased. Analysts warn that regions like Asia are particularly vulnerable to energy shocks, though some note that global growth and earnings remain supported by fiscal policies despite elevated geopolitical risks.

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