The developments drove a sharp rise in oil prices amid concerns about potential supply disruptions and wider geopolitical spillovers. Higher energy prices also pushed US Treasury yields upwards as markets reassessed inflation risks and the possible implications for Federal Reserve policy.
For the week, declines were broad-based across US equities. The Nasdaq Composite proved relatively resilient but still fell 1.2%, while the S&P 500 and Dow Jones Industrial Average also ended lower. Economic releases suggested the US economy continues to expand, with the Institute for Supply Management reporting stronger-than-expected readings for both manufacturing and services activity in February. However, labor market indicators were less consistent. Private payrolls increased according to ADP and layoffs declined, but sentiment weakened later in the week after the Bureau of Labor Statistics reported that non-farm payrolls unexpectedly fell by 92,000 and the unemployment rate rose to 4.4%.
European equities also retreated sharply as geopolitical concerns dampened investor sentiment. The pan-European STOXX 600 fell 5.6% for the week, reversing several weeks of gains. Regional markets registered notable declines, with Germany’s DAX dropping 6.7%, France’s CAC 40 falling 6.8%, and Italy’s FTSE MIB losing 6.5%. The UK’s FTSE 100 declined 5.7%. The surge in oil and gas prices heightened concerns that persistently higher energy costs could weigh on economic growth while adding to inflationary pressures, with data from Eurostat showing eurozone inflation ticking higher in February.
Equity markets across Asia also moved lower amid the uncertain geopolitical backdrop. Japan’s Nikkei 225 dropped 5.5%, while the broader TOPIX Index declined 5.6% as investors evaluated the potential impact of rising energy costs on the domestic economy. Chinese equities were comparatively more stable, with the CSI 300 and Shanghai Composite recording modest losses, while Hong Kong’s Hang Seng fell 3.3%. During the week, policymakers set a 2026 GDP growth target of 4.5% to 5% at the annual National People’s Congress, signalling a more moderate growth outlook while maintaining a focus on supporting domestic demand and investment.