Macro update
Asian markets tumble:
Regional equities fell sharply as investors priced in the risk that the Middle East conflict could trigger an energy shock and delay interest-rate cuts, with MSCI Asia-Pacific ex-Japan down 4.2% and South Korea’s KOSPI plunging more than 11%.
Chip stocks lead the sell-off:
High-beta technology shares bore the brunt of the decline as investors rapidly reduced risk exposure, with analysts describing the move as broad de-risking and momentum unwinding rather than a structural collapse.
Oil surge fuels inflation concerns:
Brent crude oil rose to around $82 a barrel after strikes on Iran disrupted energy exports and traffic through the Strait of Hormuz, a key corridor for roughly one-fifth of global oil shipments.
Safe havens attract demand:
Gold climbed more than 1% to above $5150 an ounce as investors sought protection from geopolitical risk, although recent volatility suggests deleveraging and margin calls are also influencing precious metals.
Dollar strengthens as euro weakens:
The US dollar hovered near a three-month high while the euro softened amid fears Europe could face a significant energy shock, with analysts warning higher fuel costs may complicate the European Central Bank’s (ECB) policy outlook.
Global equities retreat:
Wall Street ended lower overnight, with the S&P 500 down 0.9% and the Nasdaq 100 falling 1%, as higher oil prices and escalating tensions raised concerns inflation could remain elevated for longer.
Dow Jones tries to bounce back
The Dow Jones Industrial Average saw a sharp drop to 47,627 before attempting to recover on Tuesday, mitigating most of its heavy intraday losses and closing at 48,501. In doing so the index formed a ‘hammer’ which may mean that, for the next few days at least, the worst of the decline may have been seen.
Support may be found between the 20 to 30 January lows at 48,460 – 48,428 and minor resistance sits between the 5 to 23 February 48,732 – 48,829 lows.
Short-term outlook:
Neutral while above the 3 March 47,627 low.
Medium-term outlook:
Neutral while above the 3 March 47,627 low.