Markets Overview

  • ASX SPI 200 futures up 0.3% to 8,724.00
  • S&P 500 down 0.3% to 6,777.11
  • Dow Average down 0.1% to 47,682.93
  • Aussie up 0.6% to 0.7120 per US$
  • US 10-year yield rose 5.3bps to 4.1499%
  • Australia 3-year bond yield fell 7.8 bps to 4.48%
  • Australia 10-year bond yield fell 9 bps to 4.85%
  • Gold spot up 1.2% to $5,197.85
  • Brent futures down 8.0% to $91.02/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$1 Billion 4.25% 2036 Bonds on March 11

RBA Deputy Governor Andrew Hauser said further inflationary pressure from the war in Iran would be unhelpful as policymakers assess the impact on the economy one week out from their interest-rate meeting. Qantas is raising fares on international routes in response to rising costs including increases in jet fuel prices.

Volatility whipsawed stocks as traders parsed conflicting signals about the outlook for oil supplies as the war in Iran rattles energy markets. In late hours, Oracle Corp. jumped on a strong sales forecast.

The S&P 500 wiped out its advance. US crude trimmed a plunge that briefly drove it below $80 as the White House said no tanker has been escorted by the navy through the Strait of Hormuz, refuting an earlier, since-deleted social media post by Energy Secretary Chris Wright. Oil still sank 12%, the most since 2022, as big economies mull deploying stockpiles to avoid a crunch.

The swings in energy markets added to pressures on Treasuries stemming from jitters over the outlook for the Iran conflict, a flurry of corporate debt sales and a weak $58 billion US auction. Fears that a deeper supply shock would rekindle inflation and slam the brakes on the economy have kept a lid on bonds.

The US and Iran escalated attacks in the 11th day of the war while the White House said it’s keeping open options to address energy volatility. President Donald Trump warned Iran against laying mines in the Strait of Hormuz after news reports suggested it was either preparing to, or had already begun doing so.

Meantime, Group of Seven nations asked their main energy agency to prepare scenarios for the release of emergency oil reserves.

Oil prices are almost 40% higher since the beginning of the year as the effective closure of the Strait of Hormuz, which typically handles a fifth of global oil flows, piles more pressure on producers to curtail output with every day the Iran war goes on.

“While traders welcomed the sudden drop in oil prices, the geopolitical backdrop remains far from stable, leaving markets vulnerable to further volatility,” said Fawad Razaqzada at Forex.com. “Ultimately, the biggest factor for markets will be whether energy supplies from the region resume normally.”

The S&P 500 fell 0.2%. West Texas Intermediate settled near $83. The yield on 10-year Treasuries rose five basis points to 4.15%.

“The conflict in the Middle East and related headlines are still the major source of fluctuations in markets, with equities, oil, and rates all spending another day trying to find equilibrium,” said Sameer Samana at Wells Fargo Investment Institute. “We would continue to try and look through those near-term headlines.”

Investors betting on a hawkish response to rising oil prices could be misreading the Federal Reserve, according to Bank of America Corp., which warns that supply shocks can also result in periods of stable interest rates and even deep cuts.

An energy shock isn’t necessarily hawkish, US economist Aditya Bhave noted, because it can create tension between the central bank’s mandates to promote stable prices and support employment.

As Wall Street was rattled by oil volatility, traders geared up for inflation data due after the latest jobs report challenged perceptions the labor market is stabilizing.

The consumer price index report on Wednesday is projected to show a core inflation measure, which strips out volatile food and energy costs, rose just 0.2% last month. That would suggest some easing in price pressures before the outbreak of the war in Iran introduced new uncertainty about the inflation outlook.

While the report has lost some of its importance given recent moves in energy prices, any additional signs of inflationary pressures could sound the “death-knell” for rate cut expectations this year, according to David Morrison at Trade Nation.