Global equity markets were broadly lower this morning, with the sharpest declines in MSCI Emerging Markets (-3.0%), Topix (-2.9%), the DAX (-2.7%) and the FTSE 100 (-2.7%), while the MSCI World was more resilient (-0.7%). In pre-market trading, US futures were also pointing lower, with the Dow Jones down 0.6% and the S&P 500 down 0.6%.

The latest chain of events is straightforward enough. The Federal Reserve held rates steady, as expected. It also raised its forecasts for growth and inflation in 2026. Under normal conditions, that would suggest a firmer stance. Yet the Fed's median outlook still points to one rate cut this year. Powell stressed caution: he said it was too early to know the full economic impact of the war. And he made clear that the Fed is not about to rush in with easier money just because growth may get uglier.

Investors had spent months hoping the Fed would eventually rescue the economy from slowing demand, weaker hiring, and high borrowing costs. But an oil shock changes the script. Higher energy prices do two unpleasant things at once: they push inflation up and growth down. That is exactly the kind of mess central bankers hate, because their standard tools are built for cleaner problems. If inflation is too high because demand is too strong, raise rates. If growth is too weak and inflation is tame, cut them. But when gasoline and diesel climb because missiles are flying and gas fields are burning, monetary policy is nowhere near as effective.

Powell is effectively saying that the Fed will not pretend it can solve a supply shock with interest-rate theater. This helps explain why markets reacted so poorly even though the Fed did not actually tighten. Stocks sold off, while treasury yields rose. The S&P 500 sank to a four-month low and drifted dangerously close to its 200-day moving average, while the Dow and Nasdaq slipped below theirs.

Powell added another wrinkle by addressing his own future more directly than usual. He said he plans to stay until a successor is confirmed by the Senate, and that he intends to remain on the Fed's board until a Justice Department investigation involving him is fully resolved. For markets, it means a relatively orthodox voice could remain in place longer than expected. Powell has never been cast as some inflation zealot. But compared with whoever President Donald Trump might prefer, he looks like a guardian of institutional gravity. Trump wants Powell gone, and Powell appears in no mood to indulge him.

Meanwhile, the actual smoke is rising from energy facilities. Oil prices surged after attacks and counterattacks hit major gas and energy infrastructure across the Gulf. Israel struck Iran's South Pars gas field. Iran retaliated by targeting facilities in Qatar and Saudi Arabia. Analysts warn that if threats against sites in Saudi Arabia, the United Arab Emirates, and Qatar fully materialize, hundreds of thousands of barrels a day of refined-product capacity could vanish from the market almost overnight, squeezing diesel, jet fuel, and naphtha all at once. Brent crude has jumped above $110 a barrel and, by some estimates, could move past $120 if the disruption broadens.

Economists say a recession may not arrive unless oil moves much higher - toward roughly $138 a barrel - and stays there for weeks. In other words, this is not yet an automatic recession story. It is a pressure on households, on freight, on airlines, cruise operators, manufacturers, and every business that depends on transport or petrochemicals.

Natural gas is part of this too, and perhaps the more underappreciated part. Attacks on key facilities are changing how buyers think about liquefied natural gas, long-term contracts, and the security of future supply. Even if prices eventually cool, the sense of vulnerability will linger.

Europe is especially exposed. The United States has advantages here that many of its allies do not, as it is far more energy self-sufficient. It can release crude from strategic reserves and absorb freight distortions more flexibly. Europe, by contrast, faces the same familiar nightmare: imported energy inflation mixed with weaker growth. That helps explain why the European Central Bank, the Bank of England, the Swiss National Bank, Sweden's Riksbank, and the Bank of Japan all look inclined to hold rates steady, even as the economic backdrop grows less comfortable.

The Bank of Japan's caution is especially understandable. Japan remains heavily dependent on imported hydrocarbons, so an oil-and-gas shock lands there with special force. A country that had been inching toward higher rates now has to consider the possibility that tighter policy would collide with energy-driven weakness. For the Bank of England, a near-term cut that once looked plausible suddenly looks much less so. For the Swiss, rates are already at zero, yet the strong franc still creates headaches, meaning even negative rates cannot be fully ruled out down the road. And for the ECB, the mood has shifted sharply. At the start of the year, many expected a long pause. Now markets are even entertaining the possibility of hikes in 2026.

Equities are sorting winners from losers in brutal fashion. Airlines and cruise operators are under pressure because fuel is expensive and consumers may soon become more cautious. Memory-chip stocks fell despite strong numbers and guidance from Micron, because investors are looking harder at capital spending in a high-rate, higher-for-longer world. Nvidia slipped. SanDisk and Western Digital fell. By contrast, drone-related stocks kept climbing.

A few companies still managed to impress. Five Below rose on upbeat guidance and stronger quarterly revenue. Micron nearly tripled second-quarter revenue. Apple, lagging badly in flashy consumer AI, still appears on pace to make more than $1 billion in AI revenue this year, mostly because it controls the devices through which people access other companies' models.

Today's economic highlights:

See the full calendar here.

  • Dollar index: 100.030
  • Gold: $4,572
  • Crude Oil (BRENT): $112.67 (WTI) $96.00
  • United States 10 years: 4.30%
  • BITCOIN: $69,350

In corporate news:

  • Tesla faces an expanded NHTSA engineering analysis covering about 3.2 million U.S. vehicles equipped with Full-Self Driving over concerns about the system's degradation detection.
  • Anthropic is being phased out by the Pentagon after being labeled a supply-chain risk, but military users and contractors say replacing Claude will be difficult and disruptive, with Palantir among the affected providers.
  • Alibaba reported third-quarter revenue growth of 1.7% to 284.84 billion yuan that missed expectations, while profit fell sharply as aggressive spending on delivery and promotions weighed on margins despite optimism around AI.
  • Ant Group's quarterly net profit fell 91% to 1.2 billion yuan, according to Reuters calculations based on Alibaba's earnings release.
  • Apple's iPhone sales in China rose 23% in the first nine weeks of 2026, helped by online discounts and government subsidies despite a weaker overall smartphone market.
  • Google is partnering with DocMorris to build a digital health companion.
  • Amazon said Alexa+ began rolling out in the UK on March 19 through an early-access program.
  • Tesla CEO Elon Musk said the company could finalize the design of its next-generation AI6 chip in December, with Samsung Electronics expected to manufacture it.
  • Elon Musk said Tesla and SpaceX AI expect to keep ordering Nvidia chips at scale, even as Tesla develops its own next-generation AI processors.
  • Exxon Mobil, BP plc and Vitol are shipping a record monthly volume of U.S. fuels to Australia as the Iran conflict disrupts Asia's usual supply flows.
  • Baidu, Zhipu and other Chinese tech players are riding surging enthusiasm around OpenClaw AI agents in China, although security concerns and rising usage costs could curb adoption.
  • Micron is down 4.4% in after-hours trading following its quarterly earnings report.
  • SpaceX, xAI, and Tesla plan to continue placing large orders for Nvidia chips.
  • Elliott has reportedly taken a stake in Align, according to several sources.
  • Constellation Energy will sell PJM generation assets to LS Power for $5 billion to finalize the acquisition of Calpine.
  • Walt Disney wants to accelerate synergies between its various divisions, the WSJ reports.
  • A U.S. agency is urging companies to secure Microsoft Intune following the cyberattack on Stryker.

Analyst Recommendations:

  • Carnival Corporation: Morgan Stanley upgrades to overweight from equal weight and reduces the target price from USD 33 to USD 31.
  • Five Below, Inc.: William Blair upgrades to outperform from market perform.
  • Kinsale Capital Group, Inc.: Jefferies downgrades to underperform from hold and reduces the target price from USD 392 to USD 312.
  • Mastercard, Inc.: BNP Paribas upgrades to outperform from neutral with a target price of USD 600.
  • Micron Technology, Inc.: Summit Insights Group LLC downgrades to hold from buy.
  • Kinsale Capital Group, Inc.: Jefferies downgrades to underperform from hold and reduces the target price from USD 392 to USD 312.
  • Lyondellbasell Industries N.v.: Deutsche Bank maintains its hold recommendation and raises the target price from USD 52 to USD 75.
  • Macy's, Inc.: Citi maintains its neutral recommendation and reduces the target price from USD 24 to USD 18.
  • Occidental Petroleum Corporation: Raymond James maintains its outperform rating and raises the target price from USD 50 to USD 64.
  • Ovintiv Inc.: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 42 to USD 54.
  • Sailpoint, Inc.: Berenberg maintains its buy recommendation and reduces the target price from USD 31.70 to USD 21.
  • Targa Resources Corp.: Mizuho Securities maintains its outperform rating and raises the target price from USD 207 to USD 260.