Markets retreat as Middle East tensions weigh on sentiment

Market Commentary

Global markets closed lower on Tuesday, amid rising concerns that a US–Iran agreement would not be reached before the ceasefire deadline. Uncertainty intensified after Vice President JD Vance paused a planned trip for talks due to Tehran’s lack of commitment. After the close, President Donald Trump said the ceasefire would be extended until Iran presents a “unified proposal,” describing the country’s leadership as “seriously fractured.”

US equities moved lower, extending the pullback from record highs last week as rising energy prices and geopolitical risks weighed on sentiment. The S&P 500, Dow, and Nasdaq 100 each fell around 0.50%. Higher Treasury yields added pressure, supported by stronger private employment data and firmer core retail sales. Apple Inc. fell more than 2% after naming John Ternus as its next CEO, while Tesla Inc. slipped 1% ahead of earnings, and Nvidia Corporation declined by more than 1%. In contrast, UnitedHealth Group surged more than 8% after beating expectations and raising its outlook, while Amazon gained up to 2% following plans to invest up to $25 billion in AI firm Anthropic.

The dollar index rose to 98.3, its strongest level in about a week, as uncertainty around US–Iran negotiations supported safe-haven demand. The Strait of Hormuz remains largely shut, contributing to elevated oil prices and persistent inflation concerns. Attention also turned to the Senate confirmation hearing for Federal Reserve Chair nominee Kevin Warsh, who called for changes to monetary policy, including a revised inflation framework and clearer communication.

In the UK, the FTSE 100 fell around 1%, extending losses from the previous session. Defence stocks led declines, with BAE Systems down 4.20%, Babcock falling 1.40%, and Rolls-Royce dropping more than 6%. The pharmaceutical sector also weakened, with AstraZeneca and GSK declining 2.60% and 2.90% respectively. Other large-cap stocks, including Unilever and British American Tobacco, fell between 1.20% and 2.70%, while Associated British Foods dropped more than 2.50% after confirming plans to separate Primark. On the upside, BP rose more than 1% and utilities outperformed, with SSE up 2.70% and Centrica gaining 1.30%.

European stocks closed lower, reversing early gains as doubts grew over a near-term agreement that could restore energy exports. The Euro STOXX 50 fell 0.70% to 5 939 points, while the STOXX Europe 600 declined 0.80% to 616. Rising oil and gas prices weighed on industrial stocks, with Safran, Rheinmetall, and Airbus falling between 3% and 7%. Banks also came under pressure amid higher yields, with UniCredit, Santander, and BBVA losing close to 2% each, while L’Oréal slipped 1.50% ahead of earnings. Germany’s DAX 40 fell 0.60% to 24 271, while France’s CAC 40 dropped 1.10% to 8 236.

In Asia, China’s Shanghai Composite rose 0.07% to 4 085, while the Shenzhen Component gained 0.10%, supported by optimism around potential talks. Financial and technology stocks led gains, including Industrial and Commercial Bank of China and China Construction Bank. Japan’s Nikkei 225 advanced 0.89% to 59 349, driven by strength in technology stocks such as SoftBank Group, Kioxia Holdings, and Lasertec.

In South Africa, the SACCI business confidence index fell to 131.3 points in March from 134.6 in February, reflecting concerns over weaker trade volumes, higher energy costs, and currency volatility.

Brent crude oil rose as much as 5% to above $100 per barrel, while gold declined towards $4 700 per ounce, pressured by a stronger dollar and rising yields. Silver, gold, and platinum recorded losses of 4.05%, 2.58%, and 2.41%, respectively.