Global Markets
US equities finished a difficult week lower as markets grappled with intensifying conflict in the Middle East and persistent volatility in energy prices. The benchmark S&P 500 Index declined 1.6 percent for the week, while the Dow Jones Industrial Average fell around 2 percent and the technology heavy Nasdaq Composite dropped approximately 1.3 percent.
The decline marked a third consecutive week of losses for US equities, leaving all three major indices trading at their lowest levels since November.
Geopolitical risks intensified late in the week after US Defense Secretary Pete Hegseth announced the largest wave of US strikes against Iranian targets to date. The move reinforced the blockade of the Strait of Hormuz, a critical shipping route responsible for a significant share of the world’s oil supply. The situation has raised concerns that the global economy could face a prolonged period of stagflation, characterised by slowing growth combined with persistent inflation driven by higher energy costs.
US Treasury yields continued to climb despite a weaker than expected US GDP print for the fourth quarter. Rising yields tend to place pressure on sectors that rely heavily on future earnings growth or external financing, and technology stocks were among the weakest performers during the week.
Software companies led the decline. Shares in Adobe fell 7.6 percent on Friday following a guidance miss and the announcement of a CEO departure. Other large technology names including Meta, Palantir and Oracle also moved lower, each declining between 2 and 4 percent.
With oil prices remaining elevated and the next meeting of the US Federal Reserve scheduled for 17 to 18 March, markets widely expect policymakers to hold interest rates steady. However, expectations for the first potential rate cut have been pushed further out, with June currently viewed as the earliest realistic window.
Investors therefore continue to navigate a challenging macroeconomic environment defined by slowing global growth and persistent energy driven inflation pressures.
Australian Markets and the ASX 200
Australian equities also experienced a volatile week. The ASX 200 Index slipped 0.1 percent on Friday to close at 8,617, bringing the total weekly decline to 2.6 percent and marking the second consecutive week of losses.
Since tensions in the Middle East intensified, more than 200 billion dollars has been wiped from the combined market capitalisation of Australia’s 500 largest listed companies. This represents the most severe two week stretch since global recession fears surged in June 2022 during the inflation shock.
The week was defined by sharp swings in sentiment. Markets experienced a heavy sell off on Monday, followed by a brief recovery on Tuesday before rising oil prices once again weighed on investor confidence from Wednesday onwards.
The energy sector was the only major sector to finish the week in positive territory as higher oil and gas prices boosted earnings expectations. By contrast, real estate investment trusts were among the weakest performers as markets began pricing in a more aggressive tightening cycle from the Reserve Bank of Australia.
Among individual companies, gold producer Northern Star Resources led the losses, plunging 14 percent after warning it may face challenges meeting its financial year 2026 gold production guidance.
Thermal coal producers were a standout exception, surging as growing concerns around energy security drove Asian buyers toward alternative baseload power sources. Coal prices climbed back toward 140 US dollars per tonne.
In commodity markets, gold closed the week near 5,020 US dollars per ounce while iron ore prices held around 103 US dollars per tonne.
On the currency front, the AUD USD exchange rate pushed higher to approximately 0.6981 as investors repriced expectations for tighter monetary policy in Australia.
Interest rate markets are now pricing around 75 basis points of additional tightening by the end of the year. Futures markets imply roughly a 75 percent probability that the Reserve Bank of Australia will raise the cash rate by 25 basis points at its next meeting, which would lift the official cash rate from 3.85 percent to around 4.10 percent.
A Message From Our Founder
It has been a confronting week for markets both locally and globally. If forecasts from policymakers including Australian Treasurer Jim Chalmers prove correct and inflation trends back toward 5 percent, investors should be prepared for a more challenging environment in the years ahead.
Periods of rising interest rates are rarely comfortable for markets. However, they also create genuine opportunities for investors who are positioned correctly.
With equity and property valuations likely to remain under pressure through 2026, we have been deliberately positioning client portfolios toward debt investments that directly benefit from a higher interest rate environment.
As the Reserve Bank of Australia tightens monetary policy, those allocations work harder for investors, generating stronger income and providing resilience during periods of market volatility. For the time being, this remains the area of the market where we see the most compelling opportunities.
Stay Informed
For ongoing market insights, visit Barker Wealth’s market updates page: https://barkerwealth.com.au/market-update/
Disclaimer:
This commentary is intended for general information only and does not constitute personal financial advice. You should consider your own objectives, financial situation, and needs before making any investment decisions.