brecorder38d ago
The week concluded with heightened tension as the market remained anxious about potential geopolitical risks, particularly the fear of escalation in the Middle East following a strike on Iran by Israel and the USA.This uncertainty led investors to opt for stable financial assets over more precarious investments, resulting in a rise in the US volatility index, which finished above 3.5 percent.The closing figures for February revealed challenging circumstances within the US equity market, which continued to experience downward pressure.Stocks in the artificial intelligence (AI) sector are facing significant challenges due to the risk of substantial investments yielding minimal returns, compounded by concerns in the banking sector about possible disruptions caused by the AI industry.Meanwhile, commodity prices for gold, silver, copper, and oil showed strong demand throughout the week, with oil particularly benefiting from fears of instability in the Gulf waters.In addition, US bonds are experiencing upward strength as investors seek safe havens amid unrest in US equities and growing uncertainties in the Middle East, causing 10-year US Treasury yields to drop well below 4 percent.Given the prevailing market sentiment and trends, it can be said that the week concluded with a rally focused on geopolitical hedging of certain assets.In related developments, the US and Israel have already initiated attacks on Iran, but it remains too soon to determine the future trajectory.By the time my post is published, more details about the situation and any developments may emerge. It is to be hoped that this conflict does not escalate further, particularly around the Strait of Hormuz, where disruptions could have dire effects on shipping routes and push oil prices sharply higher. Much will depend on Iran’s response and the speed at which the situation stabilizes.Meanwhile, US inflation data suggests a persistent and troubling situation. A significant jobs report is due out on Friday, along with retail sales figures. The ongoing challenges from the war in the Middle East combined with existing trade tensions create a detrimental mix for the economy, likely driving oil prices up even if conditions improve. This might explain why the Federal Reserve is unlikely to lower interest rates until inflation shows signs of easing.Following the attacks on Iran, Bitcoin prices fell sharply, and pressure on the financial market is expected to increase unless a swift resolution to the crisis occurs.The Gulf market is already feeling strain, and historical patterns indicate rapid selling in the banking and real estate sectors. Conversely, energy and mining stocks are benefiting from increased oil prices.When the Asian markets open on Monday (today), financial markets are likely to display nervousness and are expected to drop. However, investors will be cautious, hoping for a limited and contained retaliation.Oil prices, facing significant risks, are expected to remain high, and the market will closely scrutinize Iran’s response for guidance on future oil trends.If oil prices continue to climb, it could impose severe consequences on heavily indebted emerging markets and countries reliant on borrowing, leading to extraordinarily high public and external sector liabilities.There is a risk that any disruption in shipping lanes could impact import and export activities, which are closely interconnected in many nations, as raw materials are often imported for exports.Should the unrest continue, gold, silver, and US bonds are likely to emerge as the most significant beneficiaries.WEEKLY OUTLOOK — MAR 2-6GOLD @ USD 5278— The future movement of gold will be heavily influenced by the situations unfolding in the Middle Eastern conflict. If circumstances don’t get better, we could witness an initial surge in gold prices ranging from USD 100 to USD 300. Additionally, if missile activity persists, we might reach unprecedented all-time highs. Conversely, any prospects for a ceasefire could lead to a downturn and a significant correction. Nonetheless, on Monday morning, a rise above USD 5,360 would indicate a positive first signal for gold.EURO 1.1814— The downside risk for the Euro remains until it breaks above 1.1898, which could drive it down to 1.1720 or 1.1650. On the other hand, if it surpasses the resistance level, it may reach 1.1935.GBP @ 1.3486— Pound Sterling may decline unless it surpasses 1.3590 to achieve additional gains. Conversely, a drop below 1.3405 could prompt a move towards 1.3350, while a rise above resistance level could lead to 1.3640.JPY @ 156.06— In a war like scenario, the Japanese yen might gain an advantage, requiring the $/JPY pair to stay below 156.98. If it falls below 155.10, it could lead to further declines towards 154.20 or 153.50.Copyright Business Recorder, 2026