Markets Today: European Gas futures soar 25%, Brent hits $119/barrel. Central bank pressure heats up as ECB meeting looms

• Escalating conflict in the Middle East, including strikes on energy infrastructure, caused European shares to drop sharply.
• European natural gas futures soared 25%, and Brent crude briefly hit $119/barrel, intensifying global inflation fears.
• Central banks like the ECB and BoE are now under pressure to implement rate hikes to combat energy-driven inflation, reversing previous market expectations for rate cuts

Most Read: Gold (XAU/USD) price slides 3.3%. Is Gold offering a discount or facing freefall heading into FOMC?

European shares slide on rising Middle East tensions

European markets experienced a significant downturn on Thursday as the escalating conflict between the US, Israel, and Iran triggered a surge in energy prices, complicating the inflation outlook for global central banks.

The FTSEurofirst 300 dropped nearly 2% in early trading following a series of strategic strikes on energy infrastructure, including Iran’s South Pars gas field, a major plant in Qatar, and refineries in Saudi Arabia and Kuwait.

The geopolitical instability has fundamentally shifted expectations for monetary policy.

Benchmark government bond yields rose as investors anticipated that the European Central Bank (ECB) would now be forced to implement at least two interest rate hikes this year, a sharp reversal from the pre-war forecast of a potential rate cut in 2026.

While the Swiss National Bank maintained rates at zero, it signaled a readiness to intervene in currency markets to stabilize the Swiss franc, which has surged as investors flee to traditional "safe haven" assets.

The latest volatility follows a violent cycle of retaliation described by US President Donald Trump, who noted that Israel "violently lashed out" against Iran's gas fields on Wednesday.

Iran responded by targeting oil and gas facilities across the region, including those in Qatar, Saudi Arabia, and Kuwait. This intensification has drawn urgent concern from the Federal Reserve and the Bank of Japan, leaving the ECB and the Bank of England to navigate a complex landscape of rising borrowing costs and energy-driven inflation.

European natural gas futures soared about 25% to above €68 per MWh on Thursday, reaching their highest levels in over three years.

Earlier in the session, Brent had climbed more than $10 to a high of $119.13, close to the three-and-a-half-year peak touched on March 9. Prices of Brent futures have since settled around 114.77 a barrel, a rise of around 6.9%.

These regional disruptions are particularly critical as they coincide with the start of the seasonal stockpiling period. With energy storage levels already sitting roughly 15% below the five-year average following a harsh winter, the sudden loss of Middle Eastern output threatens to leave global reserves significantly depleted heading into the next year.

The Japanese yen strengthened on Thursday, rising 0.4% to approximately 159.22 per dollar after Bank of Japan Governor Kazuo Ueda hinted at the possibility of an April rate hike.

Although the BOJ maintained its current rate at 0.75% and reiterated that the economy is recovering moderately, Ueda’s hawkish lean provided a boost to the currency.

Meanwhile, the US dollar index dipped slightly to 100.12, though it remains near a four-month high as investors abandon expectations for Federal Reserve rate cuts this year.

Markets are now almost entirely pricing in a "hold" for the Fed’s April 29 meeting, with any potential easing being pushed out as far as 2027.

In Europe, both the euro and the British pound saw modest gains, rising to $1.1468 and $1.3272, respectively. The pound's movement came alongside data showing that British wage growth excluding bonuses, hit its slowest pace since late 2020.

Similarly, the Australian dollar edged up to $0.7050 despite domestic headwinds. February data revealed an uptick in Australia's unemployment rate to 4.3%.

The digital asset market did not share in the recovery, as major cryptocurrencies retreated amid the broader geopolitical tension. Bitcoin fell roughly 1.35% to trade near $70,285, while Ether saw a 0.5% decline, dropping to $2,178.

This downward trend reflects a cautious "risk-off" sentiment as traders navigate a heavy schedule of central bank meetings overshadowed by the escalating crisis in Iran.

Currency Power Balance

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The European Central Bank (ECB) and the Bank of England are both scheduled to announce their interest rate decisions later today.

Expectations are for neither bank to change its current rates, markets will be watching very closely for any clues about how the war in the Middle East might change their future plans.

Given the ECB has struggled with high oil prices and inflation in the past, especially during the 2022 energy crisis many people are nervous about what they might do next.

However, I believe this situation is different from 2022. My expectation is for ECB President Christine Lagarde to be very careful with her words, similar to how U.S. Fed Chair Jerome Powell has been. Because the market has already predicted that rates might go up significantly over the next year, even a small comment from the bank could cause a big reaction.

In fact, because expectations are already so high, the ECB might actually sound more relaxed (dovish) than people expect, as they probably aren't ready to commit to a specific plan just yet.

The UK 100 (FTSE 100) is under heavy bearish pressure, currently trading at 10,079.2 and down 0.42% on the session. The chart shows a decisive break below the significant 10,101.8 support level, following a failure to hold the 10,269.0 handle earlier this week.

Technically, the index is trading well below its 50-period SMA (10,509.6) and 200-period SMA (10,475.3), confirming a strong downward trend. The RSI is at 30.2, hovering on the edge of oversold territory, which suggests the selling momentum is aggressive but could be nearing a temporary exhaustion point.

What to watch next:

Bearish Case: If the price remains below 10,100, the next major psychological floor is 10,000.0, followed by deeper support at 9,973.6.

Bullish Case: A recovery would require a "fake-out" reversal back above 10,101.8 to target the 10,269 resistance zone.

FTSE 100 Index Four-Hour Chart, March 19, 2026

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