Markets Balance Geopolitical Uncertainty, Cooling Commodities, and Rising Inflation Signals

Index Update:  U.S. equities advanced on Thursday, with the S&P 500, Dow Jones, and Nasdaq 100 gaining around 0.6%–0.8% as markets extended their rally into a consolidation phase. Gains were led by mega-cap technology and consumer stocks such as Amazon and Meta, supported by easing geopolitical tensions after signals of Israel-Lebanon negotiations. However, uneven performance across tech stocks indicated ongoing sector rotation, while investor sentiment remained cautious amid uncertainty around the ceasefire’s durability and elevated oil prices near USD 100.

Market Movers:  On Thursday, the top gainers were Beasley Broadcast Group, Inc. (+94.36%) and Click Holdings Limited. (64.28%). On the contrary, Byrna Technologies, Inc. (-31.03%) and Pioneer Power Solutions, Inc. (-25.37%) declined the most the same day.

Commodities Update:  Oil prices edged higher on Friday, with WTI near USD 98 per barrel and Brent around USD 96, but both benchmarks remained on track for a sharp weekly decline of roughly 12% amid cautious optimism over potential de-escalation in the Middle East. Diplomatic developments, including upcoming U.S.-Iran talks in Pakistan and Israel-Lebanon negotiations, supported sentiment, although risks persisted as the Strait of Hormuz remained largely closed with possible transit fees under consideration by Iran. Supply concerns also lingered, with Saudi Arabia reporting disruptions that reduced production capacity by about 600,000 barrels per day and pipeline throughput by roughly 700,000 barrels per day. Gold held steady above USD 4,700 per ounce and silver remained above USD 75 on Friday, with both metals on track for a third consecutive weekly gain, supported by easing inflation concerns following a decline in oil prices after the U.S.-Iran ceasefire. A weaker dollar further bolstered demand, even as it had earlier acted as a primary safe-haven during the crisis. Investor focus shifted to upcoming U.S.-Iran diplomatic talks in Islamabad, while ongoing geopolitical tensions persisted, with Israel continuing operations in Lebanon outside the ceasefire framework and the U.S. warning Iran over potential transit fees in the Strait of Hormuz.

Macro Updates

Inflation Pressures Reaccelerate on Energy Cost Surge

U.S. inflation is expected to rise sharply to 3.3% year over year in March 2026, the highest since May 2024, driven largely by elevated energy prices linked to geopolitical tensions and tariff pass-through effects. On a monthly basis, consumer prices likely increased 0.9%, marking the fastest pace since June 2022, supported by gasoline prices climbing above USD 4 per gallon. Core inflation is also projected to edge higher to 2.7% annually, with a moderate 0.3% monthly gain, indicating persistent underlying price pressures.

Dollar Weakness Persists Amid Easing Inflation Fears and Geopolitical Uncertainty

The dollar index hovered near 99 on Friday but remained on track for a weekly decline of over 1%, pressured by easing inflation concerns following a drop in oil prices amid the U.S.-Iran ceasefire. Investor attention shifted to upcoming diplomatic talks in Islamabad, though caution persisted due to ongoing Middle East tensions and disruptions in the Strait of Hormuz. Markets also awaited the March CPI data for inflation signals, while FOMC minutes highlighted concerns that geopolitical risks could sustain price pressures, even as policymakers continue to expect one rate cut this year.

Bonds Commentary:  The U.S. 10-year Treasury yield held near 4.29% on Friday, remaining lower for the week as easing inflation concerns followed a decline in oil prices after the U.S.-Iran ceasefire. Investor focus shifted to upcoming diplomatic talks in Islamabad, though caution persisted amid ongoing Middle East tensions and disruptions in the Strait of Hormuz. Markets also awaited March CPI data for inflation cues, while FOMC minutes signaled concern that geopolitical risks could keep inflation elevated, even as policymakers still anticipate one rate cut this year.

Futures Update:  U.S. stock futures traded cautiously lower on Friday, with Dow futures down 0.1% and broader indices largely flat, as uncertainty around the fragile U.S.-Iran ceasefire weighed on sentiment. Despite gains in the previous session driven by renewed diplomatic signals from Israel, ongoing strikes on Hezbollah targets in Lebanon continued to keep geopolitical risks elevated.

Following Wednesday's substantial rally, stocks experienced some pullback in early trading on Thursday but managed to turn around and finish the day on a positive note. The major averages significantly recovered from their intraday lows and closed higher, reaching their best levels in over a month. The S&P 500 advanced by 41.85 points, or 0.62%, closing at 6,824.67. The index found support at key levels and hovered near immediate resistance, which could potentially limit further upward movement in the short term. The rising key moving averages are providing support levels in the near term. The current price maintains a positive bias, supported by the rising 14-period moving average above its midpoint. Immediate resistance is observed near 6,875, while strong support is seen around 6,710.