Markets Ignore War Victory Claims, Focus on Oil Shock
On March 12, 2026, market sentiment shifted significantly as investors reacted to ongoing geopolitical tensions, particularly the conflict involving Iran. Despite claims from former President Donald Trump that the situation was largely resolved and that the war had effectively been won, market participants remained skeptical. This skepticism was reflected in the performance of equity indices, which traded mostly sideways earlier in the week but experienced a sharp decline during the Asian session on Thursday.
The primary concern for investors is the disruption to energy markets, especially oil supply. In response to rising oil prices, authorities announced an emergency release of approximately 400 million barrels of crude oil from strategic reserves. While this announcement initially boosted market sentiment, the effect was short-lived, and oil prices began to rise again, nearing the $100 per barrel mark after a brief correction earlier in the week.
The combination of increasing oil prices and declining equity markets has led to a weakening risk appetite among investors. This trend is also evident in the cryptocurrency market, where digital assets faced downward pressure as trading commenced on Thursday.
In the currency markets, commodity-linked currencies showed strength, with the New Zealand dollar performing particularly well. The Canadian dollar and the Norwegian krone also gained ground, benefiting from the rise in oil prices. Conversely, several European currencies weakened against the US dollar, which exhibited strength amidst the prevailing market conditions.
Looking ahead, the macroeconomic calendar for the day was relatively sparse, with the only notable data point being the regular US unemployment claims release. As such, market focus remained predominantly on geopolitical developments and their implications for energy prices, particularly oil. The trajectory of oil prices and the situation in the Middle East are expected to continue shaping global market sentiment in the near term.