Market developments
Equities: Global equity markets came under significant pressure this week, with the dominant theme being the surge in oil prices above $100 per barrel driven by escalating Middle East tensions. Europe bore the brunt of the selloff, with the Stoxx 600 falling 1.7% for its worst week in roughly two months, while German stocks faced mounting headwinds from the energy supply shock. In the U.S., the S&P 500 snapped a four-day losing streak on Friday, as oil pulled back from its highs and communication services and technology led a broad-based rally.
Fixed Income: It was a bruising week for global bond markets, with yields surging to multi-year highs as oil- driven inflation fears and firming central bank rate-hike expectations rattled investors across the curve. In Europe, Germany’s 10-year yield hit 3.50%, its highest since 2009, after ECB President Lagarde flagged persistent inflation risks, while municipal bond yields in the U.S. jumped to their highest levels since 2011.
Commodities: Energy markets dominated the commodity complex this week, with Brent crude surging above $100 per barrel, a roughly 10% move, fueled by escalating attacks on Gulf shipping and Saudi energy infrastructure, including the shutdown of Saudi Arabia’s East-West Pipeline following attacks on Thursday.