Gold is heading for its worst weekly performance in over four decades , as escalating Middle East tensions drive higher oil prices, rising bond yields, and a stronger US dollar , eroding demand for the non-yielding asset. Sharp Selloff Driven by Rate Expectations Gold prices dropped sharply, with bullion falling over 3% to around US$4,509 per ounce , marking an eight-day losing streak . The key driver has been a shift in monetary expectations: Markets now see a 50% probability of a rate hike by October Expectations for rate cuts have diminished significantly Higher interest rates reduce gold’s appeal, as it does not generate yield , making it less attractive compared to bonds and cash. War Escalation Fuels Inflation and Dollar Strength The ongoing conflict in the Middle East — including potential US ground troop deployment and increased military presence — has pushed energy prices higher , reinforcing inflation risks. As a resu...
US equities extended their decline, with the S&P 500 falling to a six-month low, as escalating Middle East tensions heightened inflation fears and interest rate uncertainty.
Broad Selloff as War Enters Fourth Week
Markets weakened sharply as the US-Israel-Iran conflict showed no signs of easing, raising concerns of a prolonged geopolitical shock.
- S&P 500 Index fell 1.51% to 6,506
- Nasdaq C
omposite Index dropped 2.01% - Dow Jones Industrial Average declined 0.96%
The Russell 2000 also slid 2.26%, now down about 10% from recent highs, signalling broader market weakness.
Since the conflict began in late February, major indices have fallen 4%–7%, reflecting deteriorating sentiment.
Inflation Concerns Drive Rate Expectations Higher
Rising oil prices continue to push inflation expectations upward, prompting markets to reassess monetary policy.
Futures markets now suggest the Federal Reserve is more likely to raise rates than cut them by end-2026, marking a sharp shift in expectations.
At the same time, US Treasury yields have risen for three consecutive sessions, mirroring a global bond selloff.
Big Tech and Growth Stocks Under Pressure
Large-cap technology names led declines:
- NVIDIA and Tesla fell over 3%
- Microsoft, Alphabet, and Meta Platforms dropped around 2%
All major indices are now trading below their 200-day moving averages, a key technical signal indicating weakening market momentum.
Sector Trends: Energy Outperforms, Rate-Sensitive Stocks Hit
- Utilities (-4.11%) and real estate (-3.15%) led sector losses, reflecting sensitivity to higher rates
- The energy sector remained resilient, marking its 13th consecutive weekly gain, the longest streak in decades
Market Volatility Amplified by “Triple Witching”
Friday’s session coincided with “triple witching”, where stock options, index futures, and derivatives expire simultaneously.
Trading volume surged to 27.5 billion shares, significantly above the recent average, amplifying market swings.
Corporate Highlights Add to Volatility
- Super Micro Computer plunged 33% following legal issues tied to AI technology exports
- FedEx rose modestly after delivering positive demand outlook, suggesting some resilience in global trade
Investor Takeaways
- US equities are under pressure, with the S&P 500 at a six-month low and all major indices trending below key technical levels.
- Inflation risks are rising, driven by elevated oil prices and prolonged geopolitical tensions.
- Markets are shifting toward a higher-for-longer (or even higher) interest rate outlook.
- Rate-sensitive sectors (utilities, real estate) are leading declines, while energy stocks outperform.
- Continued volatility is likely as investors monitor war developments, oil prices, and central bank responses.
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