The chaotic opening quarter of 2026 comes to a close with energy markets in turmoil as the ongoing Iran conflict pushes average gasoline prices in the United States above $4 per gallon – a threshold not crossed in more than three years.
Market volatility continues as investors grapple with uncertainty over how long the conflict will persist. A Monday report from the Wall Street Journal offered some optimism, indicating President Trump is seeking to conclude the war without requiring the reopening of the Strait of Hormuz shipping lane. This development boosted U.S. stock futures during the final trading day of a difficult March.
However, pessimistic signals emerged Tuesday morning when Iranian forces attacked an oil tanker in the Gulf region. Additionally, reports surfaced of 2,500 U.S. Marines being deployed to the area, adding to existing troop presence.
Oil markets showed mixed reactions Tuesday, with Brent crude fluctuating near $115 per barrel while U.S. crude traded around $104. Stock performance varied globally, with Wall Street futures showing gains before market opening and European shares posting modest increases on hopes for conflict de-escalation.
Despite these gains, Europe’s STOXX 600 index is heading toward its worst monthly performance since 2020. Asian markets continued their downward trend, with South Korea’s KOSPI index recording its steepest monthly decline since 2008.
Federal Reserve Chairman Jerome Powell provided some market support Monday by stating that long-term inflation expectations remained “well anchored,” though he emphasized the Fed would “wait and see” regarding the war’s inflationary impact. U.S. Treasury yields declined Monday but are still positioned for significant monthly increases.
The International Monetary Fund warned Monday that “all roads lead to higher inflation and slower growth.” Supporting this concern, eurozone inflation surged to 2.5% in March from the previous 1.9%, while German inflation data showed a jump to 2.8% from 2.0%.
Manufacturing data provided a bright spot, with Chinese factory activity expanding at its fastest rate in a year, matching similar improvements in other regions. Whether this growth occurred before or despite the March oil price shock remains unclear, with China’s substantial energy reserves potentially providing some insulation.
This week brings significant U.S. labor market data, beginning with February job openings figures and culminating with the March employment report on Good Friday. The Conference Board’s consumer confidence index will also reveal how Americans are handling the energy price surge.
Key economic events include the March consumer confidence report and job openings data at 10:00 AM, along with speeches from multiple Federal Reserve officials including Michael Barr, Michelle Bowman, Chicago Fed’s Austan Goolsbee, and Kansas Fed’s Jeffrey Schmid.
