MARKET WRAPS
Stocks:
European shares were down as oil prices trimmed gains after Brent crude jumped back above $100 a barrel earlier on Thursday.
Defense stocks rose in early morning trade following attacks on vessels in the Strait of Hormuz while airlines fell as oil prices climbed.
Markets are losing faith in a quick resolution to the Middle East conflict and the restoration of oil flows to their normal levels.
The International Energy Agency on Thursday slashed its forecast for oil-supply growth this year a day after confirming plans to release 400 million barrels of oil from strategic reserves to mitigate supply disruptions.
"Oil prices climbed back above $100 temporarily this morning, but market action so far remains calmer than during Monday's panic trading," Julius Baer said.
Economic Insight
The European Central Bank is meeting next week. Money markets expect unchanged policy rates in March and price in an increase of around 7.5 basis points for April, according to LSEG.
KBC Bank expects the ECB to raise interest rates at its policy meeting next week or in April. Having touted that policy is in a good place with room to address symmetric risks around the outlook, "it might already be time for the ECB to put the money where the mouth is," it said.
RBC Capital Markets sees a very cautious ECB meeting with various scenarios being discussed and a clear outline that all options are open. "We retain our call for no hikes this year, but stand ready to adjust those views if the Middle East situation becomes clearer to assess."
Meanwhile, Germany's leading economic-research institutes on Thursday revised their 2026 growth forecasts lower , warning of the impact on energy prices from the conflict in the Middle East.
Forex:
The euro fell against the dollar as concerns about the economic fallout from higher oil prices due to the Iran war outweigh bets the ECB could raise interest rates.
The dollar rose as the growing Middle East conflict sent oil prices higher and encouraged investors to seek safe-haven assets.
Sterling looks vulnerable as markets could have priced out further interest-rate cuts by the Bank of England too aggressively, ING said.
Bonds:
The 10-year Treasury yield hit a five-week high in Asian trade before retreating slightly.
The 10-year Bund yield soared to 2.963% in opening trade, the highest level since October 2023, according to LSEG, after the price of Brent crude oil earlier rose above $100 per barrel again.
Energy:
Oil was unlikely to return to levels that would tame inflation expectations until geopolitical tensions materially ease, Swissquote said.
XS said oil-price movements will likely be largely dependent on geopolitical developments in the Middle East.
"In this environment, geopolitical risks continue to be reflected in oil prices , helping maintain elevated levels in the near term," it said.
Sustained high oil prices may push some Asian central banks toward a hawkish monetary policy pivot, J.P. Morgan said.
Gas
European natural-gas prices rose. Gains are supported by the prospect of European buyers having to compete for available liquefied-natural-gas cargoes.
Metals:
Gold prices ticked higher but remained pressured by a firmer dollar and persistent concerns over high energy costs and inflation.
The recent decline in gold price looks short-lived, ANZ said. Lower interest rates and a weaker dollar should support investment flows into gold .
Central bank demand for gold is likely to broaden this year, it added.
Gold chart
Comex gold futures' bullish setup is still intact , based on the daily chart, RHB Retail Research said. As long as the futures stay above support at $4,800/oz, the commodity could stage a fresh attempt to test the $5,300 resistance level.
Silver
Silver could average around $93/ounce this year , according to BMI, a unit of Fitch Solutions. It cites strong investment demand, offsetting price-related demand destruction in solar panels and jewelry.
Iron
Iron ore was higher in early Asian trading. Prices were supported by spot supply concerns amid Middle East tensions, according to Nanhua Futures.
EMEA HEADLINES
Germany's Economic Institutes Downgrade Growth Forecast on Iran War
Germany's leading economic-research institutes on Thursday lowered their 2026 growth forecasts, warning of the impact on energy prices from the conflict in the Middle East.
Economic growth in Europe's largest economy would be 0.8% this year, from 1.0% previously forecast before the war and under expectations of a short-term rise in energy prices, both the Ifo Institute and the Kiel Institute for the World Economy said in separate reports.
BMW Expects Tariffs, Costs to Drag Earnings Lower
BMW expects earnings to decline this year as tariffs, higher raw-material costs and measures to stabilize its business in China all dent profit.
Like most European automakers, BMW is grappling with intense competition in China as tech-heavy domestic brands offer deep discounts to win customers, while a struggling Chinese economy and housing market have also forced a downturn in luxury spending.
Daimler Truck Adjusted Earnings, Revenue Slide on Declines in Key Markets
Daimler Truck posted lower adjusted earnings and revenue in the fourth-quarter on declines in key markets, although its order intake grew.
The German truck and bus maker said Thursday that fourth-quarter adjusted earnings before interest and taxes fell 29% on year to 780 million euros ($902.3 million), while revenue declined by 11% to 12 billion euros.
Zalando Shares Jump After Share Buyback, Levi's Deal
Zalando shares jumped on Thursday, boosted by a share buyback, an e-commerce deal with Levi Strauss and an upbeat outlook for 2026.
The German e-commerce company said it would buy back shares of up to 300 million euros ($347 million), based in part on confidence in its midterm margin goal. Zalando forecasts profitable growth this year and expects 100 million euros in synergies from its acquisition of fellow online-fashion retailer About You to come by 2028, a year earlier than originally expected.
GLOBAL NEWS
Middle East War Is Causing Largest Oil Supply Disruption in History, IEA Says
The International Energy Agency slashed its forecast for oil supply growth a day after a historic emergency stock release, as the Middle East war chokes flows through one of the world's most critical oil-transit routes.
The Paris-based organization, a group of Western nations and their allies, now expects supply to grow by 1.1 million barrels a day this year-a dramatic cut from the 2.4 million barrels a day expected previously. All supply growth is expected to come from outside the OPEC+ alliance as the conflict forces major Gulf producers to curb output.
Oil Brushes $100 a Barrel, Pushing Treasury Yields Up, U.S. Futures Down
Oil hovered close to $100 a barrel, pushing U.S. futures and global stocks lower and sovereign debt yields higher.
Widening conflict in the Middle East continued to affect markets. Trade through the Strait of Hormuz deteriorated further as Iran laid mines in the shipping route and launched fresh attacks on energy infrastructure.
Why Investors Aren't Fleeing to Safe-Haven Stocks
When investors fret over geopolitical shocks, they usually rotate into safe havens such as consumer staples and healthcare. That was the case in 2022, when Russia's invasion of Ukraine sent already-surging inflation even higher.
That isn't happening this time.
Escalating Hormuz Crisis Raises Specter of Prolonged Closure
Escalating Iranian attacks and the U.S. government's decision to hold off on military escorts for oil tankers through the Strait of Hormuz are raising the prospect of a prolonged closure that would choke off exports through the world's most important energy-transport route.
On Wednesday, the Islamic Revolutionary Guard Corps struck three cargo ships attempting to transit the waterway, the only sea route out of the Persian Gulf. It warned that any other vessels trying to move through the strait also would be targeted.
Mysterious Lull in Chinese Military Flights Leaves Taiwan Guessing
TAIPEI-For much of this decade, China has routinely sent warplanes into the airspace around Taiwan, a near-daily display of military might and reminder of Beijing's threat to seize the island by force.
But a sudden and unusual lull in Chinese flights that began nearly two weeks ago-punctuated by the reappearance of aircraft on Wednesday-has stoked uncertainty about what Beijing is doing while the world focuses on war in the Middle East.
Xi Enforces His Demand for Ethnic Unity Across China
Chinese leader Xi Jinping enshrined in law his vision for a powerful China united around a single national identity, the culmination of a long-running campaign to assimilate the country's ethnic minorities.
The new law adopted by China's rubber-stamp legislature on Thursday mandates the Communist Party to ensure the country's 55 officially recognized ethnic minorities embrace a common language and culture centered on the country's Han Chinese majority. It cements Xi's reversal of decades-old ethnic policies that had tolerated more expressions of diversity.
President Trump's Head-Spinning Pivot on an Emergency Oil Release
In a rapid reversal that left U.S. allies stunned, the Trump administration shifted from opposing the largest-ever intervention in oil markets to cajoling allies into moving forward with the maneuver in a matter of hours.
(MORE TO FOLLOW) Dow Jones Newswires
03-12-26 0715ET
