Market navigator:
week of 30 March 2026

What happened last week

• War enters second month: The US-Israel conflict with Iran entered its second month with no ceasefire in sight. Washington postponed its deadline for striking Iranian energy facilities to 6 April, citing negotiating progress, though a stark gap persists between the US proposal and Iran's conditions. Iran's demand for Strait of Hormuz control is considered a non-starter for the US and Gulf states. Brent crude oil surged above $110 per barrel.
• Japan's inflation signals diverge: Headline consumer price index (CPI) inflation fell to 1.6% year-on-year (YoY) in February, its lowest since March 2022. The Bank of Japan's (BoJ) adjusted measure – which strips out consumption tax changes, free education and energy subsidies – shows underlying inflation above the 2% target, reinforcing the case for continued policy normalisation.
• Australia inflation softens, AUD slides: Headline CPI and the Reserve Bank of Australia's (RBA) preferred trimmed mean measure both eased 0.1 percentage point in February to 3.7% and 3.3% respectively, though both remain well above the central bank's 2–3% target band and do not yet reflect any inflationary pass-through from the Middle East conflict. AUD/USD declined 2.1% over the week.
• Eurozone PMI rings stagflation alarm: The S&P Global flash eurozone composite purchasing managers' index (PMI) fell to a 10-month low of 50.5 in March from 51.9 in February, as input costs rose at the fastest pace in over three years, driven by surging energy prices and supply chain disruptions linked to the Middle East war. The data raises the spectre of stagflation and complicates the European Central Bank's (ECB) policy calculus.

Markets in focus

Nasdaq and Dow Jones officially in correction territory

US equity markets remained under sustained pressure, with the S&P 500 falling 2.1% for the week and the Nasdaq 100 sliding 3.2%. The Dow Jones held up comparatively better, declining 0.9%, owing to its lower technology weighting. Both the Nasdaq 100 and the Dow Jones have now officially entered correction territory after recording drawdowns of more than 10% below their respective peaks.

Markets remained highly sensitive to geopolitical headlines, with Middle East conflict-driven risk-off sentiment keeping the CBOE Volatility Index (VIX) elevated above 30. The traditional negative correlation between equities and bonds broke down once more, as tighter monetary policy concerns drove the 10-year US Treasury yield as high as 4.48%, weighing simultaneously on both asset classes.

Technology stocks led losses, pressured by rising yields and a sector-specific shock. Google's TurboQuant algorithm, which claims to reduce memory requirements for large language models (LLMs) by a factor of six, triggered a sharp sell-off across memory chip names. Micron fell 15.5% and SanDisk declined 13.2% over the week. Analysts remain divided on the long-term implications: some argue that greater artificial intelligence (AI) efficiency will ultimately expand rather than reduce total memory demand.

The technical outlook has deteriorated for the US Tech 100. A death cross has formed between the 50-day and 200-day moving averages (MAs), suggesting further downside ahead. The sharp sell-off on Friday challenged psychological support at 23,000, with immediate technical support located near 22,600. A technical rebound may materialise if the relative strength index (RSI) falls below 30, with resistance identified near 24,000.

Figure 1: US Tech 100 index daily price chart

Hang Seng extends losing streak

The Hang Seng Index (HSI) recorded its fourth consecutive week of negative returns, declining 1.3% to close below 25,000 for the first time since 3 August 2025, as global risk-off sentiment and a heavy earnings calendar weighed on the index. Mainland investor conviction showed signs of fragility, with southbound Stock Connect flows swinging from a net inflow of HK$29.7 billion on Monday to a net outflow of HK$27.4 billion on Tuesday. The sharp reversal reflects the market's sensitivity to shifting geopolitical headlines.

Corporate results drove sharp divergence in individual stock performance. Pop Mart plunged 28.6% despite reporting 185% revenue growth and a fourfold increase in net income. The Monsters franchise, which includes Labubu, now accounts for 38% of total annual revenue, raising concerns about the durability of growth beyond a single intellectual property (IP). Kuaishou fell 14.4% despite solid earnings, as capital expenditure guidance of approximately RMB 26 billion for 2026 – nearly double 2025 levels – stoked concerns over AI-driven margin pressure. Meituan advanced 8.5%, though pre-results optimism faded after the company reported a full-year net loss of RMB 23.4 billion, swinging from a profit of RMB 35.8 billion in 2024, as aggressive expansion into local services eroded margins amid intense competition.

The HSI's close below the 25,000 psychological level is technically significant. A clear descending trendline has formed; until the index breaks and closes above this line – currently situated near 25,500 – any rallies should be treated as temporary bounces. The recent trough at 24,204 provides near-term support, though a failure to hold that level may open a deeper pullback towards 23,200.

Figure 2: Hang Seng Index daily price chart

AUD/USD retreats to two-month low

AUD/USD fell 2.1% over the week to close near $0.6875, its lowest level in two months, as a confluence of headwinds weighed on the commodity-sensitive currency. Softer domestic inflation – with consumer prices unchanged month-on-month in February and annual inflation easing to 3.7% – reduced the urgency for immediate RBA tightening.

Meanwhile, concerns over a prolonged Middle East conflict weighed on the demand outlook for Australia's key commodity exports. Copper futures hovered near a three-month low as rising oil costs threatened to curb business activity and increase inflationary pressures globally, clouding the outlook for industrial metal demand. iron ore faced additional pressure as Chinese steel exports to the Middle East declined sharply following the outbreak of war, reducing downstream demand for the steelmaking raw material.

As markets priced out Federal Reserve (Fed) rate cuts amid oil-driven inflation concerns, a strengthening US dollar added further downside pressure on Australian dollar. The RBA cautioned that a sustained energy price shock could simultaneously lift inflation and weigh on growth, complicating its policy response.

Technical momentum for AUD/USD has weakened over the past two weeks, though the long-term uptrend remains intact as the pair holds above its 200-day MA. A sustained breach below the recent trading range of 0.6896–0.7188 would signal further downside pressure towards 0.675–0.676. Traders should monitor the potential formation of a death cross between the 20-day and 50-day MAs. Any rebound is likely to encounter resistance near 0.710–0.712.

Figure 3: AUD/USD daily price chart

The week ahead

The forthcoming week presents three distinct tests for the global macro-outlook.

Friday's US March employment situation report, preceded by JOLTs job openings on Tuesday and the ADP employment change on Wednesday, will test whether the US labour market is stabilising or deteriorating further. February's contraction of 92,000 jobs raised concern, though Fed Chair Powell has attributed the recent weakness to a structural decline in labour supply driven by lower immigration and workforce participation. Meanwhile, continuing claims fell to 1.819 million in the week ending 14 March – the lowest since May 2024 – indicating that layoffs remain contained. Together, these data points paint a 'slow hire, slow fire' picture. Any signals of sharper deterioration would further complicate the Fed's dual mandate, as upside inflation risks stemming from the Middle East conflict leave little room to prioritise employment without risking price stability.

Tuesday's euro area flash inflation reading will be the first to capture the early inflationary impact of the Middle East conflict. ECB President Lagarde has warned that the war will have a material impact on near-term inflation, with the bank's baseline now projecting 2026 headline inflation at 2.6%. If headline inflation reaches the market consensus of 2.8%, stagflation concerns would sharpen and the probability of near-term rate hikes would increase.

China's dual purchasing managers' index (PMI) prints this week carry particular significance given the divergence between surveys. The RatingDog manufacturing PMI surged to 52.1 in February – its highest since December 2020 – driven by strong new orders and rising output, contrasting sharply with the official PMI contraction reading of 49.0. A return to expansion in both readings would support the view that China's reinflation is demand-led rather than solely a function of elevated raw material costs.

Figure 4: US labour market data

Key macro events this week

(In GMT+8 time zone)

Monday 30 March 2026

• 10.30pm – US Fed Chair Powell speech

Tuesday 31 March 2026

• 7.50am – Japan retail sales YoY (February): previous 1.8%, consensus 0.8%
• 8.30am – Australia RBA meeting minutes
• 9.30am – China NBS manufacturing PMI (March): previous 49.0, consensus 50.0
• 9.30am – China NBS non-manufacturing PMI (March): previous 49.5, consensus 49.9
• 5.00pm – Euro area inflation rate YoY flash (March): previous 1.9%, consensus 2.8%
• 10.00pm – US JOLTs job openings (February): previous 6.946 million, consensus 6.85 million

Wednesday 1 April 2026

• 7.50am – Japan Tankan large manufacturers index (Q1): previous 15, consensus 16
• 9.45am – China RatingDog manufacturing PMI (March): previous 52.1, consensus 51.9
• 8.15pm – US ADP employment change (March): previous 63,000, consensus 42,000
• 8.30pm – US retail sales MoM (February): previous –0.2%, consensus 0.4%
• 10.00pm – US ISM manufacturing PMI (March): previous 52.4, consensus 52.3

Thursday 2 April 2026

• 9.30am – Australia trade balance (February): previous A$2.631 billion, consensus A$2.5 billion

Friday 3 April 2026

• 9.45am – China RatingDog services PMI (March): previous 56.7, consensus 53.7
• 8.30pm – US non-farm payrolls (March): previous –92,000, consensus 48,000
• 8.30pm – US unemployment rate (March): previous 4.4%, consensus 4.5%

_{Source: Trading Economics, Nasdaq, LSEG (as of 29 March 2026)}