Market Perspectives
U.S. equity markets ended the week lower in a volatile backdrop dominated by escalating geopolitical tensions, renewed oil price volatility and persistent inflation concerns, alongside a more hawkish interpretation of the Federal Reserve’s latest signals and ending with Friday’s “triple-witching” expiry of roughly $5.7 trillion in notional options tied to individual stocks. The Dow Jones Industrial Average led declines, falling 2.11%, followed by the Nasdaq Composite, down 2.07%, while the S&P 500 lost 1.90%, reaching a six month low. Fixed income markets reflected the shift in inflation expectations, with the 10-year U.S. Treasury yield rising around 10 basis points on the week to 4.38% as investors reassessed the policy outlook. Across the Atlantic, the focus was squarely on the intensification of the Middle East conflict, with attacks on oil tankers in the Strait of Hormuz and damage to key gas infrastructure in Qatar amplifying energy market risks. The pan-European STOXX Europe 600 fell 3.79%, while government bond yields surged, extending the sharp repricing across rates markets. Germany’s DAX declined 4.55%, France’s CAC 40 dropped 3.11%, Italy’s FTSE MIB fell 3.33% and the UK’s FTSE 100 lost 3.34%. Asia proved comparatively resilient. Japan’s Nikkei 225 slipped just 0.83% in a holiday-shortened week, while Hong Kong’s Hang Seng edged down 0.74%. Looking ahead, the market narrative narrows to a single question: can the U.S. restore the flow of energy through the Strait of Hormuz — or does the next leg of repricing still lie ahead?
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BONDS & MACROECONOMICS
The 10-year U.S. Treasury yield rose around 10 basis points to 4.38% as investors reassessed the policy outlook, while European government bond yields surged, extending the sharp repricing across rates markets.
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