Markets Today: Oil surges as Iran denial sours market sentiment, Japan inflation near 4-year lows. FTSE eyes 10000 psychological level

• Oil prices surged by 4% after Iran denied engaging in de-escalation talks with the US
• The US dollar strengthened on safe-haven demand and diminishing expectations for a Federal Reserve rate cut this year.
• Japan’s core inflation rate slipped to 1.6% in February, falling below the central bank’s 2% target for the first time in nearly four years.
• Technically, the FTSE 100 index is in a consolidation phase with a bearish alignment

Most Read: Gold (XAU/USD) recovers from 9% plunge, technical bias remains firmly bearish below $4,500/oz

Emerging Asian equities saw a volatile session on Tuesday, ultimately paring their early gains as investor anxiety persisted regarding the energy-related economic fallout from the ongoing Middle East conflict.

While market sentiment was initially bolstered by a recovery from previous losses, jitters remained high following Iran's denial of negotiations with the US aimed at ending the war.

Consequently, major benchmarks across the region struggled to maintain their morning momentum, reflecting a cautious atmosphere despite the day's technical rebounds.

Performance across individual markets was characterized by significant intraday retreats. South Korea’s KOSPI, which surged over 4% early on, settled closer to a 2.4% gain by the afternoon, while Taiwan’s shares cooled to a 0.8% increase after peaking at 2%.

Similar patterns emerged in Singapore and Bangkok, where initial gains of 1.8% were whittled down to much slimmer margins. Despite these daily fluctuations, the broader monthly outlook remains grim; most regional benchmarks are deep in the red for the month, with losses ranging from 1% to 14%, leaving Indonesia and South Korea as some of the period's weakest performers.

Japan’s annual inflation rate eased to 1.3% in February, down from 1.5% in January and marking its lowest level since March 2022.

This cooling trend was largely supported by food inflation, which remained near a 15-month low at 4.0% due to a significant slowdown in rice price increases.

Additionally, price growth softened in the transport and clothing sectors, while education costs continued a steady decline of 5.6%.

A major contributor to the disinflationary pressure was the energy sector, where government subsidies led to steeper drops in electricity (-8.0%) and gas (-5.1%) costs. While some categories like housing and healthcare remained stable, and others such as communications and recreation saw slight accelerations, the overall trend leaned downward.

Notably, the core inflation rate slipped to 1.6%, falling below the central bank’s 2% target for the first time in nearly four years.

On a monthly basis, the Consumer Price Index (CPI) retreated by 0.2%, marking the third consecutive month of decline.

European equity markets were poised for a lower opening on Tuesday, erasing the gains achieved during the previous session.

The optimistic sentiment that had briefly lifted global markets on Monday evaporated after Iran denied engaging in de-escalation talks with the United States. Despite earlier claims from President Donald Trump that productive negotiations were underway, which led him to postpone strikes on Iranian energy infrastructure for five days, the regional conflict intensified as Iran continued strikes on US assets and Israel launched new attacks against both Iran and Lebanon.

This resurgence of geopolitical tension has left investors cautious as they shift their focus to upcoming manufacturing data from across Europe. These reports will be critical for assessing how businesses are navigating the current climate of uncertainty and supply chain risks.

Reflecting this shift toward risk aversion, Euro Stoxx 50 and Stoxx 600 futures fell by 0.7% and 0.9%, respectively, during premarket trading.

Global commodity markets remained volatile as geopolitical tensions and macroeconomic shifts took center stage.

Oil prices surged by 4%, with Brent futures climbing $4 to reach $103.94 a barrel and West Texas Intermediate (WTI) rising $3.49 to settle at $91.62. This rebound followed a significant 10% drop on Monday after President Trump raised ceasefire hopes..

However, prices rallied again after Iran denied that any such negotiations with the United States had taken place, reigniting fears of supply disruptions in the Gulf.

In contrast, the precious metals market continued a downward trend, with gold prices falling more than 1% for a tenth consecutive session.

Spot gold dropped 1.6% to $4,335.18 per ounce, hitting its lowest point since late November, while US gold futures saw a similar decline to $4,336.10. The slump in bullion was primarily driven by a strengthening US dollar, which increased the cost for international buyers, and diminishing expectations that the Federal Reserve would implement interest rate cuts in the near future.

Gold prices have bounced ahead of the European open with the precious metal trading back above the $4400/oz handle at the time of writing.

On Tuesday, the US dollar regained its footing as a shift toward investor caution bolstered the currency.

The dollar index, which tracks the greenback against a basket of major peers, rose 0.2% to 99.387, recovering from a previous dip to a two-week low. This performance puts the index on track for its strongest monthly gain since October, rising 1.8% this month.

The dollar's resilience is largely fueled by safe-haven demand stemming from ongoing geopolitical conflict and a shift in market expectations, as traders have moved away from pricing in a Federal Reserve interest rate cut for this year. Analysis suggests the currency will likely remain supported until there are clear signs of international de-escalation.

The dollar's strength weighed heavily on other major currencies, causing most to retreat from recent gains. Sterling eased 0.49% to $1.3388, and the euro slipped 0.3% to $1.1583, following brief rallies on Monday.

Similarly, the Australian dollar dropped 0.6% from its six-week high to $0.6968, while the New Zealand dollar fell 0.5% to $0.5832.

Meanwhile, the Japanese yen remained weak at 158.73 per dollar after February data showed core consumer inflation in Japan hitting 1.6%. Falling below the Bank of Japan’s 2% target for the first time in nearly four years, this cooling inflation complicates the central bank’s ability to justify further interest rate hikes.

Currency Power Balance

Read More:

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• Peace hopes? – North American Session Market Wrap for March 23
• Farewell, Rate Cuts – Markets Weekly Outlook

The European session will be a bit busier today with a host of PMI data releases from both the EU and the UK.

Moving to the US session, the current US macroeconomic landscape is centered on two pivotal releases: the weekly ADP jobs report, which investors are monitoring for any signs of labor market softening, and the provisional PMI data for March. While it may be premature for the PMI figures to show a significant downturn, there is a growing consensus that the ongoing energy supply shock will eventually dampen business sentiment.

The US Dollar Index (DXY) has hit a ceiling at the top of its nine-month range, stalling near the 100.25/50 mark. Its potential for further gains in the medium term appears limited unless there is another major spike in energy prices or a visible strain in financial liquidity such as a widening of cross-currency basis swaps, which occurred briefly yesterday as banks turned to the FX swap market for dollar funding.

For now, the DXY is expected to remain within a tight 99.00–100.00 range, pending the next major development in the Middle East conflict.

From a technical perspective, based on the 4-hour chart the index is currently navigating a period of significant bearish volatility.

The index has transitioned from a steady uptrend in early 2026 to a sharp corrective phase.

• Bearish Structure: The chart shows a clear "lower high" and "lower low" pattern since late February, when the index retreated from its record high near 10,910.
• Moving Averages: The price is trading well below both the 50-period (Blue) and 200-period (Yellow) SMAs. Notably, the 50-SMA is sloping downward and has crossed below the 200-SMA, often referred to as a "Death Cross," signaling sustained bearish momentum.

The index is currently fighting to gain acceptance above the psychologically significant 10,000 level, which has flipped from support to a "sticky" resistance zone.

The recent candles show long "wick" rejections near the 9,816 level, indicating that buyers are stepping in at these lower valuations, likely driven by the FTSE's heavy weighting in energy giants (BP, Shell) which benefit from $100+ oil prices.

The FTSE 100 is in a short-term bearish cycle within a broader high-volatility environment. The index is currently "oversold" on a sentiment basis but fundamentally pressured by rising UK inflation (3%) and the Bank of England's "hawkish hold" at 3.75%.

The Bull Case: If the index can reclaim and close above 10,000, it may attempt a relief rally toward the 200-SMA near 10,450.

The Bear Case: Failure to hold 9,816 likely triggers a retest of the 9,610 major support floor.

FTSE 100 Index Four-Hour Chart, March 24, 2026

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