US equities brace for impact of Middle East 48-hour ultimatum

Geopolitical tensions and energy prices drive US equity market volatility

United States (US) equity markets closed lower on Friday, driven by uncertainty from the Middle East conflict, surging energy prices, and the rising threat of central bank interest rate hikes in response to persistent inflation risks.

Nowhere is this uncertainty more evident than in oil markets and the Middle East, which continue to maintain a vice-like grip on all other asset classes. Over the weekend, headlines have swung dramatically between dovish and hawkish tones. Reports initially surfaced that President Trump's team had begun discussions on what potential peace talks might look like. However, this was quickly followed by Trump delivering a high-stakes 48-hour ultimatum directed at Iran – reopen the Strait of Hormuz or face strikes on its power plants.

Striking Iran’s major power plants would trigger widespread blackouts, crippling everything from pumps and refineries to export terminals, military command centres, and even vital water and desalination plants.

Iran's countermeasures and their impact on global markets

In response, Tehran has vowed to completely close the Strait of Hormuz if the US follows through on its threat and to keep it sealed until its destroyed power plants are rebuilt. Iran has also warned that any strike on its energy infrastructure will make all regional energy facilities, information technology (IT) systems, and desalination plants belonging to the US, Israel, and their Gulf partners legitimate targets.

With approximately 24 hours remaining on Trump's ultimatum, the market response to this escalation has been mixed. In Asia, the reaction has been severe: the Korean KOSPI has dived 6.63% and the Nikkei 225 has slumped 4.8% following their reopenings.

However, US S&P 500 equity futures have fallen by a modest 0.5% to 6,525, while Brent crude oil is trading 2.38% lower at $109.31 and West Texas Intermediate (WTI) crude oil is holding steady at $98.18, down 0.04%.

The modest falls in both crude oil and US equity futures likely reflect the view that the US is better positioned to withstand a prolonged closure of the Strait of Hormuz given its status as an energy exporter. These markets may also be taking a more optimistic view that Trump cannot realistically deliver on his threat, given the immense risks it poses.

Nasdaq 100 technical analysis

The Nasdaq 100 has been in a corrective phase since hitting its late-October peak of 26,182. The correction has been defined by a clear double top that formed in late January on the topside and a strong band of support at 24,350 - 23,850 that we have been watching closely. This crucial support zone includes the 200-day moving average (MA), currently at 24,359, and the November 21 low of 23,854.

Towards the end of last week, the Nasdaq 100 broke below this support band, causing preliminary technical damage. If the break is sustained in the early part of this week, it suggests a significantly deeper correction could be underway, potentially towards 23,000.

A sustained recovery back above the 200-day MA at 24,359 and then above horizontal resistance at 24,550 - 24,650 is needed to put the Nasdaq 100 back on firmer ground.

Nasdaq 100 daily candlestick chart

Dow Jones technical analysis

In our Wall Street updates earlier this month, we noted that the Dow Jones had traced out a classic head-and-shoulders topping pattern, with the neckline around 48,500 - 48,400.

The daily close below that neckline in early March triggered a decisive slide lower. The index hit our 46,500 target for the pattern before continuing its descent into Friday’s low of 45,369. This level lands right in the middle of the medium-term support band at 45,500 - 45,000 that we highlighted in last week’s update.

Looking ahead, the price action around this zone will be crucial. If this support band holds, it is reasonable to expect a bounce back toward resistance at 46,550, where the 200-day MA now sits. However, if the 45,000 level gives way, the technical picture darkens significantly, with little in the way of support until 44,000.

Dow Jones daily candlestick chart

• _{Source: TradingView. The figures stated are as of 23 March 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}