Blog week ending, 13th March 2026
Markets:
- Local and global equity markets experienced heightened volatility this week amid uncertainty over how and when the Iran conflict may conclude. Despite this, equities held up reasonably well given the backdrop.
- The Australian stock market recorded its worst single day fall in eleven months, driven by the escalating conflict and associated oil price shock. The ASX200 fell to its lowest level since mid-December, though this follows an exceptionally strong start to the year.
- Government bond yields continued to climb, with UK yields hitting their highest levels since mid-October and on track for their biggest weekly rise since September 2022. German yields moved towards their highest point since 2011, reflecting growing concern about the inflationary effects of the conflict.
- In local stock news, commodity and energy producers led early-week losses, before staging a partial rebound later in the week, supported by bank stocks. . Market weakness returned toward the end of the week on softer US equity performance and reports of tankers being targeted in the Middle East.
- Lynas Rare Earth shares surged, after securing a price floor in a new 12-year supply contract extension with a Japanese customer.
- Oil prices swung sharply climbing to almost US$120 a barrel before retreating below US$90 as the Iran conflict continues and regional tensions broaden. The Strait of Hormuz remains closed, though US President Trump has suggested the conflict may end soon as he weighs taking control of the key shipping channel.
- Energy markets steadied late in the week, after the G7 agreed to release a record 400 million barrels from strategic reserves to bolster global supply.
- The US dollar is on track to finish this week flat, having recovered from earlier weakness. The Australian dollar strengthened to its highest level since May 2022, supported by rising expectations of an RBA rate hike next week.
Economics:
- Investors have scaled back expectations for global interest rate cuts, as economists warn that rising stagflation risks (higher inflation alongside weaker growth) are complicating central bank policy outlooks.
- Expectations for a March RBA rate hike increased, following hawkish remarks from the Deputy Governor.
- Australian consumer sentiment improved in March, reversing February’s sharp decline marking the first rise since November. Sentiment appears to be stabilising, though inflation expectations rose sharply.
- US retail sales inched lower by 0.2% in January, following a flat result in December. It was the first monthly decline since October, though the result was slightly better than expected.
- The US economy lost 92,000 jobs in February, the largest drop in four months and well below forecast for a 59,000 gain. January’s result was also revised down to a 126,000 increase.
- US Private payrolls fell by 86,000 in February, following a downwardly revised 146,000 gain in January and significantly missing expectations for a 65,000 rise.
- US core inflation rose 0.2% in February, with headline inflation up 0.3%, both in line with forecasts. Annual inflation held steady at 2.4%, in line with expectations, remaining at its lowest since May 2025.
- The Euro area economy grew 1.2% over the year to December quarter, marking the slowest annual pace in more than a year, with all major spending categories showing softer growth.
- Germany factory orders slumped 11.1% in January, far exceeding expectations for a 4.3% drop. It was the first decline since August, largely driven by a plunge in fabricated metal products.
- Germany’s exports fell 2.3% in January, reversing December’s strong but revised lower 3.9% increase, while coming in weaker than expected.
- Japan’s economy grew 0.3% in the December quarter, matching market expectations and an improvement on the initially reported estimate. The reading followed a 0.7% contraction in the previous quarter.
- Chinese inflation rose 1% in February, marking a three year high and well ahead of expectations, driven largely by Lunar New Year related price increases.
- China’s January-February export growth significantly outpaced expectations, underscoring continued strength in the country’s trade sector.
Politics:
- The conflict in Iran continued this week with ongoing US and Israeli strikes and President Trump demanding Iran’s “unconditional surrender” Iran has continued to target Israeli and US/oil-related assets across the Middle East, while Israel has advanced into southern Lebanon.
- Iran appointed Mojtaba Khamenei, son of the late Ayatollah Ali Khamenei, as its new Supreme Leader. The 56-year-old has maintained a low public profile holding no formal government posts and rarely speaking publicly but is widely believed to wield considerable influence behind the scenes.
- The Federal Government advanced its new superannuation tax changes, passing legislation through the House of Representatives and sending it to the Senate, where the Greens are reportedly pushing for lower thresholds.
- Concerns emerged over Australia’s fuel inventories, after a surge in additional orders created supply-chain pressures. The Energy Minister however reassured the public that Australia maintains adequate fuel.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
