Finance

Energy prices have spiked sharply following military strikes on Iranian industrial and nuclear facilities, with Brent crude rising over 4% to settle above $112 per barrel. Markets are bracing for a persistent energy disruption as Iran retaliates and threatens to close the vital Strait of Hormuz. These developments have fueled concerns of a renewed wave of global inflation, complicating the path for central bank policy.

The yield on the 10-year Treasury note reached 4.44% on March 27, its highest level since mid-2025, as investors adjusted to a more restrictive economic outlook. High energy prices and persistent inflation data have led traders to scale back expectations for interest rate cuts, with many now anticipating only one 25-basis-point reduction for the remainder of 2026. This upward pressure on yields has already begun to impact borrowing costs for mortgages and business loans.

Shares of the AI chip giant Nvidia fell over 2% on Friday, bringing its valuation below the S&P 500's forward price-to-earnings ratio for the first time in years. This shift occurs as the broader technology sector faces a significant repricing, with investors weighing AI demand against geopolitical supply-chain risks. Despite the recent slump, long-term projections for global IT spending remain high, estimated to exceed $6 trillion for 2026.

Digital assets followed the broader trend of risk aversion, with Bitcoin dropping below the $67,000 level on March 27 following the liquidation of roughly $300 million in long positions. While the market showed brief resilience earlier in the week due to intermittent hopes of de-escalation, persistent energy pressures have weighed on investor conviction. Ether has shown relative strength compared to Bitcoin but remains susceptible to the ongoing volatility in global financial markets.

While mega-cap technology and large-cap indexes have struggled, small-cap companies have demonstrated stronger returns in the first quarter of 2026. The Russell 2000 index managed a slight gain for the week ending March 27, contrasting sharply with the significant losses seen in the S&P 500 and Nasdaq. This performance suggests a potential shift in market leadership as investors rotate away from highly valued software and AI firms toward more traditional sectors.