Equities Tumble as Oil Nears $116 on Conflict Escalation

Edgen Stock

·Mar 30 2026, 09:33

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Key Takeaways

Global markets slid and energy prices climbed as the five-week-old conflict in the Middle East intensified, triggering a broad risk-off move among investors. The escalation, marked by the entry of Houthi forces, drove Brent crude prices higher and caused the worst weekly performance for equity markets in months, fueling concerns over sustained inflation and slower economic growth.

Markets Sell Off: The S&P/ASX 200 fell 0.7% to 8461 and Brent crude rose 3% to $115.53 a barrel after Houthi forces entered the regional conflict, sparking concerns of a wider supply chain disruption.
Sector Rotation: Investors fled interest-rate sensitive sectors, with Australian banks like Westpac dropping 4.1% and tech stocks like WiseTech sinking 4.8%, while rotating into energy and materials stocks like Alcoa, which gained 8.3%.
Stagflation Risk: Barclays analysts warn that markets are under-pricing geopolitical risk and forecast a stagflationary environment, with global growth projected to slow to 2.9% and inflation rising to 2.7% by the end of 2026.

Brent Crude Nears $116 as Equities Tumble on Geopolitical Shock

Global equity markets experienced their worst weekly performance in months after Houthi forces entered the five-week-long Middle East conflict on March 30, 2026. The escalation immediately impacted energy markets, pushing Brent crude up 3% to $115.53 per barrel on fears of strategic shipping lanes being targeted. The move triggered a broad sell-off in risk assets, including cryptocurrencies and equities. Australia's S&P/ASX 200 Index dropped 0.7% to 8461, recovering slightly from an earlier 1.6% decline. The benchmark has now fallen 8% for the month, briefly entering a correction.

Investors Dump Banks and Tech for Energy and Metals

The market turmoil prompted a clear rotation out of rate-sensitive sectors into commodities. Financials and technology stocks led the declines. Major Australian banks fell sharply, with Commonwealth Bank losing 2.8% and Westpac dropping 4.1%. Technology stocks also came under pressure, with Xero falling 3.2% and WiseTech sinking 4.8%. In contrast, the higher oil price benefited energy producers, with Santos climbing 1.3% and Woodside Energy gaining 2.2%. Mining stocks rallied on supply concerns after attacks hit Middle Eastern aluminum producers; Alcoa shares increased 8.3% and South32 advanced 9.4%.

Barclays Warns of Stagflation as Global Growth Forecast Cut to 2.9%

Analysts at Barclays cautioned that investors are displaying complacency and may be underestimating the risks of a prolonged conflict. The bank warned that sustained high energy prices could create stagflationary pressures, characterized by slowing growth and rising inflation. Barclays economists now forecast global growth will slow to 2.9% by the end of 2026, while inflation is expected to rise to 2.7%. Advanced economies are projected to see weaker expansion, with the Euro area forecast to grow by just 0.7%. This growing macroeconomic uncertainty challenges the prevailing investor optimism that had been built on expectations of central bank support.