Oil explodes 22% amid Middle East chaos and stagflation fears – Nasdaq and Dow eye critical support

WTI crude spike triggers global market sell-off

United States (US) equity markets finished Friday in the red, weighed down by surging oil prices and a surprisingly soft February jobs report that amplified stagflation fears. For the week, the Dow Jones plunged 1476 points (-3.01%), marking its steepest weekly drop in nearly a year. The S&P 500 shed 2.02%, while the Nasdaq 100 finished 1.27% lower.

This morning, WTI crude oil surged, spiking to a session high of $111.24 (+22.3%) before paring some gains to trade up 17.26% at $106.65. The move triggered sharp selling across Asian equity markets, with South Korea's KOSPI taking the hardest hit, plunging over 7% in early trade on oil-driven risk-off sentiment.

The violent reaction stems from the markets seeing no obvious offramp in the escalating Middle East conflict, now a high-stakes standoff where neither side appears willing to concede. The risk of more lasting economic damage continues to build by the day.

President Trump has maintained an aggressive rhetoric, at times demanding unconditional surrender in the hope that unrelenting pressure will splinter the regime's inner circle or prompt pragmatic concessions from elements within the Iranian Revolutionary Guard Corps (IRGC). He also posted this morning that the oil spike is likely temporary, describing it as 'a very small price to pay for USA and World Safety and Peace.'

While this may hold true longer-term, no clear timeline has emerged. US and Israeli strikes persist against Iranian infrastructure, oil facilities, missile sites, and other strategic targets, while Tehran retaliates with missile barrages on Israel and regional US assets and allies.

Geopolitical and economic concerns

Geopolitics alone is challenging enough, but Friday's soft non-farm payrolls report has added real fuel to global concerns. It showed a decline of 92,000 jobs in February, well below the expected gain of around 55,000, with the unemployment rate ticking up to 4.4% from 4.3%.

The reappearance of the labour market cracks that surfaced late last year comes just as oil has surged more than 60% in March alone. This sets an ominous backdrop for the March non-farm payrolls report due in four weeks’ time.

Looking ahead, beyond Middle East headlines and crude oil's volatility, attention will centre on the Federal Reserve's (Fed) preferred measure of inflation, core personal consumption expenditures (PCE). As the recent sharp oil rise falls outside the January report window, it will mainly confirm that core PCE inflation was already a sticky 3% before the Iran escalation intensified.

The typical lag for a move of this size to show up in inflation data is 6 - 12 weeks, meaning the first meaningful read on the surge in crude oil prices will come in the April inflation report, released in May. In the meantime, the pain at the pump is immediate and being felt by motorists long before any official numbers reflect it.

Nasdaq 100 technical analysis

The Nasdaq 100 has been in a corrective phase since its late-October peak of 26,182, reinforced by a clear double top in late January.

Early last week, the index tested a low of 24,315, holding just above the critical 24,200 - 23,850 support zone we've been watching closely. This band includes the 200-day moving average (MA) at 24,194 and the November 21 low of 23,854.

With Nasdaq 100 futures down around 2.25% this morning, the cash index looks set to test this support zone on tonight's open.

If it holds, we'll watch for signs of basing to fuel a rebound toward the 26,182 high. A sustained break below 24,200 - 23,850, however, would signal a deeper correction toward 23,000.

Nasdaq 100 daily candlestick chart

Dow Jones technical analysis

In last week’s report here, we noted that the Dow Jones had fallen back into its former 48,500 - 49,600 range after hitting a record high in mid-February and appeared to have drawn out a head and shoulders topping pattern with the neckline around 48,500 - 48,400.

The break of the 48,500 - 48,400 support zone (the neckline of the head and shoulders topping pattern) resulted in a decisive move lower into the end of last week.

With Dow futures down nearly 1,000 points today, the cash index should test the 46,500 head and shoulders target we flagged last week when it opens tonight, reinforced by the 200-day MA at 46,332 just below.

Dow Jones daily candlestick chart

• _{Source: TradingView. The figures stated are as of 9 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.}