🌟 Geopolitics and Gas: Markets Grip for an Energy Shock

It was a week where the “wall of worry” grew. Markets were forced to digest a volatile mix of escalating Middle Eastern tensions and a “hawkish hold” from major central banks, leaving most major indices firmly in the red. As the FTSE 100 slipped back below a key milestone, the primary theme was clear: a shift toward “Risk-Off” sentiment.

📈 Weekly Scoreboard

Index	Weekly Change (%)	Current Level
S&P 500	-1.90%	6,606
Nasdaq Composite	-2.07%	21,647.61
FTSE 100	-3.34%	9,918.33
Nikkei 225	-3.40%	53,372.53
EURO STOXX 50	-2.45%	5,122.10
MSCI Emerging Markets	-1.19%	1,459.00
China (SSE Composite)	-1.60%	3,145.20

🌍 Global Drivers & Macro

• Energy became the market’s main macro story. Brent crude settled at $112.19 a barrel, its highest since July 2022, as conflict involving Iran disrupted supply expectations and intensified worries around the Strait of Hormuz. Higher oil matters because it can squeeze consumers, lift business costs and keep inflation hotter for longer.
• Central banks did not cut — and markets heard a hawkish message. The Fed, ECB and Bank of England all held rates steady, but investors came away thinking rate cuts are less likely and, in some cases, further hikes are back on the table if energy-led inflation persists.
• That hit equity valuations. When bond yields and inflation expectations rise together, the market tends to mark down shares, especially growth stocks and more rate-sensitive parts of the market. That helps explain why US and European indices struggled through the week.
• Flows backed up the caution. Global equity funds suffered $20.3 billion of outflows, the largest in three months, while money market funds pulled in $32.57 billion. In other words, investors were moving from risk assets into cash-like shelter

🇬🇧 UK Corner

• The UK market had another difficult week. The FTSE 100 fell about 3.3%, and the FTSE 250 dropped about 3.3% as higher oil, higher gilt yields and a weaker domestic mood weighed on both global and UK-focused shares.
• The Bank of England sounded firmer than markets expected. It left Bank Rate at 3.75% unanimously and warned inflation could climb to around 3.5%, which pushed traders to reduce hopes of cuts and price in the possibility of hikes later this year.
• UK data did not help sentiment. Wage growth eased to 3.8% and unemployment rose to 5.2%, suggesting a softer labour market, but February public borrowing came in at £14.3 billion, well above the £8.5 billion Reuters poll expectation. That mix leaves the UK facing both growth concerns and inflation pressure

🏦 Key Asset Movers

• FX – Sterling: The pound slipped on Friday to around $1.333-$1.334, but it still posted a weekly gain of roughly 0.8% after the Bank of England’s hawkish tone. A firmer pound can soften imported inflation a little, but the bigger story this week was that UK rate expectations moved up.
• Commodities – Oil & Gold Paradox: Brent Crude oil surged roughly 9% to settle above $112 a barrel, reflecting the immediate threat to supply. Interestingly, Gold ($4,643) actually saw a slight dip; usually a safe haven, it was weighed down this week by the spike in US Treasury yields, which makes non-yielding assets like gold less attractive.

📰 Key Headlines

• BoE holds rates at 3.75% as Iran war scuppers rate-cut hopes (MoneyWeek) — The MPC voted unanimously to pause, blaming the global energy shock for pushing UK inflation well above target for longer.
• FTSE 100 hits 2026 low on oil surge and rate-hike fears (Trading Economics) — The UK’s flagship index closed at 9,918 on Friday, its lowest point of the year, led lower by Smiths Group and commodity names.
• Brent crude breaches $112 as Iran Strait of Hormuz closure continues (Reuters/CNBC) — Iran’s new Supreme Leader confirmed that closure of the key shipping lane is a strategic tool, keeping energy markets in crisis mode.
• S&P 500 posts third consecutive weekly loss — longest streak since early 2025 (Capital Street FX) — The US index shed 1.6% this week, with new 52-week lows outnumbering 52-week highs on the Nasdaq.
• AAII bearish investor sentiment tops 52% (Seeking Alpha) — Over half of individual investors surveyed expect markets to fall over the next six months — a stark reversal from the optimism seen at the start of 2026.
• CNN Fear & Greed Index hits 11 — Extreme Fear — The closely-watched sentiment gauge has crashed to its lowest level in years, reflecting widespread panic and defensive positioning among retail investors.
• US Treasury yields climb as rate-cut bets evaporate (First Merchants) — Bond investors are now demanding higher returns to account for persistent inflation, adding further pressure to equities.

📑 Companies Reporting

This was not a classic “mega-cap earnings week”, but several well-followed companies still moved markets:

• Accenture: Revenue beat expectations on strong AI and cloud demand, and the shares rose more than 3%. It was a useful sign that corporate tech spending is still holding up.
• Micron: Strong numbers and upbeat guidance were not enough; the stock fell about 5% because a $5 billion increase in capital spending made investors more cautious. Great demand is one thing, but the market still cares about how expensive growth becomes.
• FedEx: The company raised its full-year profit forecast, and the shares initially jumped sharply. Even so, the market remained alert to fuel costs and the near-term demand outlook.
• Smiths Group / JD Wetherspoon: In the UK, the sharpest reactions were negative. Smiths fell after missing organic growth expectations, while Wetherspoon dropped almost 14% after warning on cost pressures.

⚖️ Investor Sentiment Dashboard

The message from all three major sentiment indicators this week is unambiguous: Risk-Off. The CNN Fear & Greed Index crashed to just 11 — Extreme Fear, while the AAII survey for the week ending 19 March showed bearish sentiment surging to 52% — with only 30.4% of investors remaining bullish, well below the long-term average of 37.6%. Taken together, these readings point to investors in near-panic mode: selling equities, seeking shelter in gold and cash, and pricing in the worst-case scenario for oil and inflation. The silver lining? Extreme Fear readings of this magnitude have historically marked short-term market bottoms — though that is cold comfort when the underlying macro story (oil, inflation, geopolitics) remains unresolved.

Fund flows: Recent weeks have seen clear rotation away from US mega-cap technology and into European and UK equities, defensive sectors, and commodities. Energy stocks and utilities have been the standout gainers in an otherwise painful market environment.

📅 Next Week’s Radar

• UK Consumer Confidence (Tuesday, 07:00 GMT): A vital health check for the UK high street and domestic stocks.
• US Jobless Claims (Thursday, 13:30 GMT): Markets will watch this for any signs that the US labor market is finally cooling.
• US PCE Inflation Data (Friday, 13:30 GMT): The Fed’s favorite inflation gauge; a high reading could cement the “no-cut” narrative for 2026.
• Energy Infrastructure Updates (Daily): Any news regarding the reopening of the Strait of Hormuz will likely trigger immediate market swings.

⚡ The Final Take

This week’s defining story is energy — its price is high, its political uncertainty is higher, and its consequences are rippling through inflation forecasts, central bank decisions, and investor confidence worldwide. The FTSE 100 hitting a 2026 low, the BoE stuck in “wait and see” mode, and sentiment gauges flashing Extreme Fear are all symptoms of a market adjusting to a world where cheap oil is, for now, a memory. Whether a diplomatic breakthrough on the Strait of Hormuz can change the narrative remains the pivotal question

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© Clearly Investments Ltd. Educational information only. This is not investment advice.