- U.S. Markets
U.S. equity markets ended Thursday sharply lower as a surge in crude oil prices and escalating geopolitical tensions in the Middle East weighed on investor sentiment. The Dow Jones Industrial Average fell 731 points, or 1.5%, while the S&P 500 declined 1.5% and the Nasdaq Composite dropped 1.8%. The sharp surge in oil prices added pressure on U.S. equities. Brent crude jumped 9.2% to $100.46, while WTI crude surged 9.7% to $95.73 as escalating tensions around Iran raised concerns about potential supply disruptions. Comments from Trump administration officials that the U.S. military is not prepared to escort oil tankers through the Strait of Hormuz intensified fears of tighter global supply. The spike in crude prices weighed on market sentiment, as market participants worry that higher energy costs could fuel inflation and potentially delay expected Federal Reserve rate cuts, creating a negative backdrop for equities.
Among corporate movers, fertiliser companies rallied on expectations of higher fertiliser prices amid shipping disruptions. Mosaic Co. gained 7.6%, while CF Industries Holdings surged 13%. On the downside, technology stocks remained under pressure with Nvidia falling 1.5% and Meta Platforms declining 2.6%. , UiPath also dropped 8.2% after forecasting slower fiscal-year revenue growth despite beating expectations for its fourth quarter results.
At the time of writing, the S&P 500 is trading around 6,686, while the Nasdaq Composite is near 24,552, as markets continue to monitor developments in energy markets and geopolitical tensions. The US has started trade investigations into 60 economies, including China, the EU, and India, over concerns that goods made with forced labour are entering global supply chains. This move could lead to new tariffs and higher trade tensions. For today’s intraday trade, the outlook remains uncertain amid escalating geopolitical tensions, rising oil prices and growing global trade concerns. Markets generally dislike uncertainty, which should keep sentiment bearish. However, any positive developments regarding the conflict could support a rebound. The key level to watch is $6,579 on the S&P 500, a break below it could accelerate downside momentum.
Market participants will closely watch key economic data releases today, including Q4 GDP, Core PCE inflation, and JOLTS job openings, which could provide further clues on inflation trends and the Federal Reserve’s policy outlook.
Technically, immediate resistance is at yesterday’s high of $6,765, followed by the 100 Day SMA at $6,847 and the 50 Day SMA at $6,883. Immediate support is at the 200 Day SMA at $6,622, followed by the key level at $6,579 (current week’s low).
- Crude Oil
Thursday witnessed another jump in Crude Oil prices, with WTI closing the session almost 9% higher and Brent closing 8.82% higher. Both oil benchmarks were stable during Friday’s Asian session, trading flat, while Brent stayed above $100 a barrel.
As the tensions in the Middle East continue for a second week, the International Energy Agency warned on Thursday that the current oil supply disruption is the largest in the history of the oil market. It is estimated that the global oil supply is set to fall by 8 million bpd in March, underscoring the recent volatility in prices. This roughly represents a decline of more than 7% from the roughly 107 million bpd produced in February. Crude oil prices spiked on supply fears, despite the US Department of Energy announcing its intent to release 172 million barrels from reserves as part of a global drive by 32 members of the IEA to release a total of 400 million barrels from reserves to support energy needs. It is safe to say that market volatility would remain on the higher side, with oil direction largely gauged by news flows.
From a technical perspective, the 4-H chart for WTI shows prices remaining above the 9-EMA levels, currently providing potential support near $94, followed by the 21-EMA near $91.35. More upside for prices could continue if it breaks above the session highs near the $98 mark.
- U.S. Dollar Index
The dollar rose by 0.49% yesterday and is up by 0.08% this morning, trading at 99.83.
On a fundamental level, elevated geopolitical risks in the Middle Eastern region is seeing the dollar holding on to its gain. As the Middle East enters its 13th day of the war, one driver is increasingly overshadowing the others when it comes to the US dollar: oil prices. In a short duration, a historic surge in energy prices brought on by the US-Israeli attack on Iran has pushed inflation higher and growth outlooks across the world. That includes the US, where Treasury prices have been sinking. The dollar, nonetheless, has marched higher. It is due to US’s position as the world’s top oil producer and by the dollar’s role as the currency for global crude trade.
In the options market, the bullish narrative for the dollar continues. Moreover, according to Bloomberg, the options market suggests that the dollar can reach Dec levels that were 100.43. One-month risk reversals, which measure the difference in demand between bullish and bearish dollar options versus its major peers, rose earlier to their highest level since late 2022 at 92 basis points.
On a technical level, the dollar is at a critical juncture. The dollar is currently trading in an ascending channel, connecting the lows of January 30, February 16, and February 27, while the upper boundary connects the highs of January 26, February 6, March 3, and March 6. Based on the channel, major resistance lies at $99.92. A sustained break above this point may lead to further upward movement toward the psychological $100 level. On the downside, support lies at $99.41, the open of yesterday.
The RSI is currently 69.79, indicating bullish momentum, and the MACD is currently reflecting a buildup in momentum as it trades at 0.48.
- Gold and Silver
Gold is heading for its second weekly decline as the US dollar strengthens and oil prices surge due to the Middle East conflict.
Gold was trading slightly above $5,100 per ounce today, up 0.47%, supported by some buyers stepping in after the recent dip. Meanwhile, Silver declined by 1.60% to $82.40.
Tensions remain high in the region, with strong statements from Donald Trump and Mojtaba Khamenei amid ongoing fighting. The conflict has largely disrupted shipping through the Strait of Hormuz, pushing oil prices higher.
Higher oil prices are increasing inflation concerns, which has reduced expectations that the Federal Reserve and other central banks will cut interest rates soon. Investors now expect almost no chance of a rate cut at the next Fed meeting; there is about a 70% chance of one cut later this year. Higher interest rates usually hurt gold, as a non-yielding asset.
The ongoing conflict between the US, Israel, and Iran has also slowed gold’s recent rally. Over the past two weeks, price movements have been volatile, as some investors sold gold to cover losses in other markets. Even with the recent pullback, gold is still up about 18% this year and has mostly stayed above $5,000 per ounce.
As of now, gold could remain under pressure due to elevated rates.
On the chart, Gold prices are trading in a narrow range between $5,070 and $5,130, suggesting consolidation before the next move. The immediate 4-hour resistance is around $5,130, followed by $5,188. As for support, $5,037 is the first support followed by $4,994.
Silver prices have been forming lower highs, which suggests buyers are still not in control. The first resistance level is around $83.7, then $84.9. Support is near $81.50, with stronger support around $80.
Gold Prices in the UAE
24k: AED 615.00
22k: AED 569.50
21k: AED 546.00
18k: AED 468.00
14K: AED 365.00
