Escalating tensions in the Middle East unsettled global markets. Traders worried that attacks on energy assets would keep oil prices high and fuel inflation. Investors also focused on a surprise rise in US wholesale prices and the Federal Reserve’s policy meeting.

Equity Markets React to Conflict

Stocks declined as investors sought safety. The S&P 500 fell about 0.7% in morning trading, halting a two‑day advance. The NASDAQ 100 and Dow Jones Industrial Average dropped by similar margins. European stocks also fell, with all major European and global stock markets down.

Bond markets were also affected, as the risk-off sentiment was reflected in higher US, German, and British bond yields. US 10-year Treasury bond yields rose above 4.20%, while German and British bond yields also rose. Earlier in the month, bond yields rose by around 5 basis points as investors considered the inflationary pressure caused by higher oil prices.

Currencies mirrored the flight to safety. The dollar advanced roughly 0.3% against major peers. The euro, pound, and yen each slipped about 0.3%, similar to the moves reported earlier in March when the euro dipped toward $1.15 and the yen weakened to 159 per dollar.

Oil Price Surge Drives Inflation Worries

Oil jumped after Israel struck Iran’s South Pars gas field and Iran threatened retaliation. Brent crude approached $110 per barrel, while West Texas Intermediate crude rose more than 3% to around $99. A Reuters article noted that during the previous escalation, Brent settled above $100 and WTI neared $96. Higher energy costs feed directly into inflation data. 

In addition, the US wholesale prices, which are recorded in the Producer Price Index (PPI), have soared over the past few months, indicating an increase in inflationary pressures. The PPI increased 0.7% in February 2026, compared to an increase of 0.36% in January, marking a significant acceleration in price increases. 

This spike is a concerning issue among economists because inflation has been persistent since before the current geopolitical tensions. The rising wholesale prices, which are mainly caused by the rising cost of energy and raw materials, may increase the strain on consumers and businesses, affecting the overall economic growth. The Federal Reserve is now under more pressure to respond to these escalating costs, which could restrict its capacity to boost the economy by reducing interest rates.

The Federal Reserve is widely expected to keep its benchmark rate steady, but Chair Jerome Powell’s comments will be closely watched for clues about how policymakers interpret the inflationary shock. Market participants are weighing whether the energy‑driven price spike is a temporary shock or a more persistent problem that could embed inflation expectations.

Gold, usually a haven, provided mixed signals. During the day, Spot gold fell 2% to $4,903.19 per ounce, its ​lowest level since February 18. US gold futures for April delivery ⁠also dropped 2% to $4,907.40. As the latest conflict intensified, gold rose initially, then slipped as investors preferred cash.

Corporate Highlights

• Micron Technology Inc: Investors await its earnings update after memory‑chip prices lifted the stock.

• Macy’s Inc: The retailer raised its quarterly sales forecast, citing strong spending by middle‑ and higher‑income shoppers.

• Lululemon Athletica Inc: The athletic‑wear firm projected another year of declining profits while searching for a new chief executive.

• General Mills Inc: Results missed expectations due to price cuts, though management expects long‑term benefits.

• Tencent Holdings Ltd: The technology company plans to more than double its investment in artificial intelligence to over 36 billion yuan.

• Alibaba Group Holding Ltd: The e‑commerce giant is raising prices for its AI computing and storage services by as much as 34%.

• Sandisk Corp: The storage maker’s shares climbed ahead of Micron’s earnings, reflecting optimism about demand.

• Seagate Technology Holdings: The hard‑drive producer benefited from expectations of improved margins as the sector recovers.

• Applied Optoelectronics Inc: The optical‑components supplier gained after highlighting opportunities in high‑speed communications.

• Lumentum Holdings Inc and Coherent Corp: Both companies rose as investors sought exposure to telecommunications equipment.

• Gemini Space Station Inc and Strategy Inc: The cryptocurrency-linked stocks declined after analysts lowered their Bitcoin price outlook.

Future Outlook

Markets are on edge as traders monitor the conflict and its impact on oil supply and inflation. Energy prices and upcoming data will guide sentiment, while the Federal Reserve’s decision may provide clarity. A swift de-escalation could calm markets, but prolonged disruption may keep energy costs high and complicate monetary policy.

Also Read: Stock Market Today: Sensex Flat at 74,560, Nifty at 23,148 Amid US-Iran War; Adani Power Jumps 4%