U.S. markets remain pressured, with the S&P 500 (SPX) falling 2% in Friday’s session amid rising oil prices and higher bond yields, which continue to weigh on sentiment. Today, the index is trading around $6,373, 0.27% higher.
The S&P 500 ended its fifth consecutive week of declines, marking the longest losing streak in almost four years. Oil remains central to the narrative. Crude prices are holding near recent highs as disruptions through the Strait of Hormuz persist, with tanker flows running far below normal levels. Even hopes for an Iran deal have not improved sentiment, since any agreement is unlikely to restore supply quickly. Risks are also rising as Houthi activity near the Bab el-Mandeb chokepoint could further tighten global energy flows.
The macro backdrop is deteriorating. Elevated oil prices are reinforcing inflation while simultaneously weighing on growth, increasing the risk of a policy misstep. This dynamic is pressuring equities, while bonds are beginning to outperform on rising slowdown expectations and safe-haven demand.
Market structure remains weak. The Nasdaq 100 has entered correction territory, breaking below its 200-day moving average. Recent rallies have faded quickly, and there are few buyers stepping in. Valuations for large tech companies have dropped, with the S&P 500’s blended 12-month forward P/E now below 20, down from last year’s highs. The S&P 500’s average blended forward P/E since 2000 sits around 16.8, and the current reading of 19.02 still leaves ample room for further compression if markets were to mean-revert fully.
From a technical perspective, the $6,285 to $6,315 range is still an important support level. If the market falls below this area, it could drop further to $6,150. On the upside, $6,440 and then Friday’s high of $6,520 are resistance levels. For markets to stabilise, oil prices need to come down and geopolitical tensions need to ease. Overall, the outlook is still cautious, with oil and global events keeping stocks under pressure.
Crude Oil
As the US – Iran conflict enters its fifth week, oil has risen by almost 1% in today’s session, with WTI at $102.7 and Brent at $112. During the weekend, Iran-backed Houthi forces entered the Middle-East conflict, raising more concerns about an escalation. Furthermore, the US has deployed thousands of troops to the Middle East, raising concerns about a potentially dangerous ground invasion. According to a recent interview, President Trump aims to take the oil in Iran and seize the export hub of Kharg Island. The war shows no signs of ending soon, with all recent de-escalation efforts fading away. Brent and WTI have gained almost 50% in March, spiking concerns about rising inflation worldwide. The heightened concerns are reflected in the Brent-WTI spread widening to $10. Moreover, Brent’s prompt spread indicates serious concern about short-term supply in a backwardated, bullish pattern, with the front-month contract trading at a significant premium to the next. The current spread between Brent’s May and June contracts is nearly 7.6.
Technically, WTI is currently trading at $102.7, above the 9- and 21-day SMAs at $96.5 and $90.87, respectively. It has also broken above the $86-102 range it had been trading within over the past few days. It faces the next resistance at $85, followed by $120. It may find support at the $102 level, followed by the 9- and 21-day SMAs.
Brent is trading at $112, well above its 9- and 21-day SMAs of $106.88 and $98.45, respectively. It has also broken above the $96.1 – $107.4 range. It faces the next resistance at the $114 level, followed by $120. The daily RSI is again trending upward towards 70, indicating bullish momentum built into the commodity. It may find support at the 9 and 21-day SMA levels, followed by the range low at $96.1.
U.S. Dollar Index
The U.S. Dollar Index remains well supported, heading for its strongest monthly performance since December 2024, with March set to close up around 2.5%. Currently, DXY is trading near $100.11, retreating from its monthly high of around $100.54. The rally is mainly driven by safe-haven demand and a shift in expectations, with markets scaling back bets on a Fed rate cut amid rising Middle East tensions.
The broader macro environment continues to support dollar strength. Rising geopolitical tensions have pushed up energy and commodity prices, increasing demand for the U.S. dollar. Since most commodities are priced in dollars, energy-importing countries need more USD to pay for higher costs, creating steady demand for the currency. In addition, disruptions in key shipping routes have driven up prices across oil, gas, fertilisers, plastics, aluminium, and transport. This is likely to push up costs for food, pharmaceuticals, and petrochemical products, further supporting demand for the dollar as global trade and commodity flows remain dollar-dependent.
On the FX front, the EUR/USD pair recovers a few pips after retesting a one-week low and holding steady around the 1.1502 level in today’s early morning Asian session. The upside, however, seems limited as rising geopolitical tensions might continue to benefit the safe-haven US Dollar and would act as a headwind for its spot prices.
Technically, the DXY index has he immediate support at its 9 Day SMA level at $99.67, followed by the low of last week at $98.97. The immediate resistance is at $100.54, the current month’s high, followed by $101.28. EUR/USD has immediate resistance at its 9 Day SMA at 1.1548 and support at 1.1484 (last week’s low).
Gold and Silver
Gold and silver are trading steadily in today’s session, with gold above $4,500 and silver over $70. Both metals notched their first weekly gain since the Middle East conflict began. Gold rose 0.28%, and silver rose 4.19% last week. The current trend is positive as long as the bullion remains above $4,400. This is also a level where dip buyers have usually returned to provide support.
A fall in breakeven rates (future inflation expectations) last week, along with a fall in rate-hike expectations, could have provided the support. Gold’s 30-day correlation with the SPX has fallen to 0.24 from its last week’s peak of 0.31. Similarly, silver’s 30-day correlation with the SPX has fallen to 0.38 from last week’s high of 0.44. With equities remaining under pressure, this bodes well for both precious metals. However, headwinds persist in the form of a stronger DXY above $100. Crude prices trend higher on further escalation fears, which could pressure precious metals. Many countries that have accumulated the metal are also energy importers, so rising oil prices mean fewer dollars are available to be recycled into gold. Also, if central banks, especially those in emerging markets, decide to sell gold to raise liquidity and support their currencies, that would add headwinds to gold. For silver, resilient industrial demand, driven by the push to clean energy and EVs (to offset a spike in crude prices), supports prices. Last week, money managers increased their bullish silver bets by 1,614 net-long positions to 10,915, according to CFTC data on futures and options.
Technically, gold will look to close above the $4,500 today for further upside. The $4,400 mark appears to be the first support level, followed by the 200-day EMA at $4,213. Resistance is likely at the 100-day EMA at $4,600, followed by $4,700. The momentum is steady and slowly rising, with the RSI touching 40. Silver will aim to stay above $70 today, with support likely at the $65- $67 range. Next support is possibly at the 200-day EMA at $62. On the other hand, resistance is likely in the $72-$74 range, which also includes the 100-day EMA.
