Markets Under Pressure into Weekend – Nasdaq down 2%
Markets closed the week on a distinctly weaker footing, with risk sentiment deteriorating sharply on Friday as escalating tensions in the Middle East continued to dominate investor focus. US equities extended their decline, marking a third consecutive weekly loss, with the Dow Jones falling 0.96% to 45,577, the S&P 500 dropping 1.51% to 6,506, and the Nasdaq leading losses, down 2.01% to 21,647. Fixed income markets reflected a shift toward higher-for-longer rate expectations, with US Treasury yields surging across the curve. The 2-year yield jumped 10.8 basis points to 3.900%, while the 10-year yield rose 13.0 basis points to 4.380%, adding further pressure to equity valuations. In currency markets, the US dollar regained momentum, rising 0.27% to 99.50, supported by higher yields. Commodity markets continued to react strongly to the evolving situation in the Middle East. Oil prices pushed higher on continued supply disruption fears, with Brent climbing 3.26% to $112.90 and WTI rising 2.80% to $98.23. In contrast, gold saw a sharp reversal, falling 3.39% to $4,487.65, as the combined weight of a stronger dollar and rising yields offset any traditional safe-haven demand.
Gold Has Lost Its Lustre Since War Began
One of the biggest surprises to many traders since the recent conflict in the Middle East started has been the dramatic demise of gold (and silver). Adding to the shock for experienced traders has been the price action that we saw in the first couple of months of the year, which took the world’s favourite precious metal up just over 29% to a fresh record high just under $5,600 an ounce, with many market commentators citing geopolitical concerns in part for the extent of the move. We have now seen gold fall 18% from peak to trough since the US and Israel first initiated strikes against Iran, which surely increased geopolitical concerns. Yes, there are other mitigating factors that influence the moves in gold—both up and down—and the strength of the dollar and US yields would surely see some outward flow; however, again there seem to be larger flows driving the price in 2026, which have detracted from its usual haven status. For now, traders have to trade what they see in front of them rather than some of the more traditional fundamentals.
Geopolitical Updates to Dominate in Sessions and Days Ahead
Over the weekend, geopolitical risks intensified further, reinforcing Friday’s negative sentiment. President Trump issued a two-day ultimatum to Iran, threatening to target its energy infrastructure if the Strait of Hormuz is not reopened, whilst also advising that more ground troops are to be sent to the region. Iran responded with warnings of potential retaliation against Gulf energy facilities, raising the prospect of broader regional escalation. Looking ahead, the macroeconomic calendar is notably quiet today, leaving markets highly sensitive to geopolitical developments. With no major data releases scheduled and nothing in the way of central bank updates, price action is expected to be driven primarily by headlines out of the Middle East, ensuring volatility remains elevated across global markets.
