Global Markets Remain Range-Bound as Geopolitics and Policy Uncertainty Intersect

Index Update:  U.S. equities were mixed on Tuesday as persistent Middle East tensions kept energy prices elevated and pressured risk-sensitive sectors. The S&P 500 remained flat, the Dow edged lower, and the Nasdaq 100 rose slightly. Technology and AI-related stocks declined sharply, while defensive names provided some support. In financials, private credit concerns weighed on Apollo and Ares, whereas Jefferies gained on potential acquisition interest from Sumitomo.

Market Movers:  On Tuesday, the top gainers were Robin Energy Ltd. (+91.82%) and ENvue Medical, Inc. (58.04%). On the contrary, Achieve Life Sciences, Inc. (-28.40%) and Artelo Biosciences, Inc. (-24.41%) declined the most the same day.

Commodities Update:  WTI and Brent crude oil futures fell over 6% to around USD 86.8 and USD 98 per barrel, respectively, as optimism over U.S. diplomatic efforts to resolve the Iran conflict outweighed ongoing military tensions and disruptions near the Strait of Hormuz. Despite continued hostilities and limited cooperation from Iran, markets reacted to signs of potential de-escalation, even as the crisis continued to strain global energy supply chains, triggering fuel shortages and emergency measures across multiple regions. Gold rose above USD 4,500 and silver climbed past USD 73 per ounce, extending recent gains as optimism over potential U.S.–Iran negotiations supported safe-haven demand. Reports of a proposed ceasefire and a diplomatic plan improved sentiment despite ongoing military developments, while previous declines in both metals had been driven by inflation concerns and expectations of prolonged higher interest rates amid elevated energy prices.

Macro Updates

Mortgage Demand Weakens Amid Rising Borrowing Costs

U.S. mortgage applications fell sharply by 10.5% in the week ending March 20, extending the prior week’s 10.9% decline, as the average 30-year fixed mortgage rate rose to a five-month high of 6.43%. Higher borrowing costs, driven by elevated Treasury yields and reduced expectations of rate cuts amid geopolitical tensions, significantly weighed on housing demand. Refinancing activity dropped around 14–15%, while purchase applications declined about 5%, highlighting increasing affordability pressures for homebuyers.

Dollar Holds Steady as Diplomacy Eases Inflation Concerns

The U.S. dollar index hovered around 99.4, remaining below recent highs as markets assessed potential de-escalation in the Iran conflict. Signals of ongoing negotiations between the U.S. and Iran helped ease geopolitical tensions, leading to a sharp drop in oil prices and providing temporary relief from inflation fears. However, expectations for Federal Reserve rate cuts have been pushed back, with markets now anticipating a prolonged period of stable interest rates.

Bonds Commentary:  The U.S. 10-year Treasury yield declined to around 4.35%, retreating from recent highs as reports of potential U.S.–Iran negotiations eased geopolitical concerns. While diplomatic signals, including a proposed ceasefire and peace plan, supported sentiment and helped lower oil prices, uncertainty persisted due to conflicting statements from Iran and rising regional tensions. Meanwhile, expectations of prolonged higher interest rates remained, as the Federal Reserve signaled a continued focus on controlling inflation.

Futures Update;  U.S. stock futures moved higher on Wednesday, supported by optimism around a potential resolution to the U.S.–Iran conflict. As of early trading, Dow futures rose 1.1%, S&P 500 futures gained 1.0%, and Nasdaq 100 futures advanced 1.2%, reflecting improved risk sentiment.

Following the recovery rally observed during the previous session, stocks exhibited a relatively lackluster performance during Tuesday's trading. Major averages fluctuated throughout the session before ultimately closing in negative territory. The S&P 500 declined by 24.63 points (0.37%), finishing at 6,556.36. From a technical standpoint, the index remains above key support levels around 6,490 and could potentially move higher in the near term. However, the 21- and 50-day exponential moving averages (EMAs) are trending downward, indicating a shift in momentum and acting as resistance levels. Additionally, the 14-period RSI is below the neutral point, suggesting a negative bias. Important levels to watch are support at 6,500 and resistance near 6,625.