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New Zealand’s business confidence deteriorated sharply in March, with ANZ Business Confidence falling from 59.2 to 32.5 as geopolitical tensions disrupted the recovery narrative. The decline was even more pronounced in late-month responses, which averaged -23, highlighting how sentiment worsened as uncertainty intensified following the escalation in the Middle East.

The hit to sentiment was matched by a slowdown in activity expectations. Own Activity Outlook dropped from 52.6 to 39.3, suggesting firms are already seeing a pullback in demand as decision-making is deferred. ANZ noted that while recovery had begun to take hold earlier in the year, conditions shifted quickly, with businesses reporting a direct impact on activity as uncertainty increased.

At the same time, inflation pressures moved in the opposite direction. Inflation expectations rose from 2.93% to 3.08%, while the share of firms expecting to raise prices climbed 7 points to 60%, and even higher to 67% in late responses. The average expected price increase also accelerated from 2.0% to 2.4%, or 3.3% in the late-month sample, pointing to growing pricing power despite weakening demand.

Cost pressures are also intensifying, with 85% of firms expecting higher costs, up from 79% and the highest since early 2023. The late-month reading of 93% marks the strongest since mid-2022.

Full NZ ANZ business confidence release here.

Japan’s industrial production contracted -2.1% mom in February, matching expectations and marking the first decline in three months. The drop was driven largely by weaker automobile output, with production falling across 12 of 15 sectors.

The Ministry of Economy, Trade and Industry maintained its assessment that output “fluctuates indecisively,” pointing to a lack of clear direction rather than a sustained downturn. Forward-looking indicators remain more constructive, with manufacturers expecting output to rebound by 3.8% in March and 3.3% in April.

Elsewhere, domestic demand signals were softer, with retail sales falling -0.2% yoy against expectations of 0.8% yoy, highlighting cautious consumption. However, the labor market remains resilient, with the unemployment rate edging down from 2.7% to 2.6%.

Japan’s Tokyo CPI data for March showed further easing in inflation, with core CPI (ex-fresh food) slipping from 1.8% yoy to 1.7% yoy, below expectations of 1.8% yoy. The reading marks the lowest level since April 2024 and remains below the Bank of Japan’s 2% target for a second consecutive month.

Underlying inflation also showed signs of moderation, with core-core CPI (ex-fresh food and energy) easing from 2.5% yoy to 2.3% yoy. Headline CPI edged down from 1.5% yoy to 1.4% yoy.

Much of the weakness in headline figures continues to be driven by energy, where prices fell -7.5% yoy following a -9.2% yoy drop in February, largely reflecting government subsidies to curb utility costs. However, the energy picture is becoming more complex. Gasoline prices declined just -1.0% yoy in March, a sharp slowdown from February’s -14.7% yoy drop, as the impact of tax cuts was offset by rising oil prices linked to Middle East tensions.

Business confidence understandably fell in March, particularly later in the month as the consequences of the Middle East conflict for New Zealand became more apparent.

Key results, March 2026

• Business confidence: 32.5 (Prev: 59.2)
• Expectations for own trading activity: 39.3 (Prev: 52.6)
• Activity vs same month one year ago: 17.5 (Prev: 23.4)
• Inflation expectations: 3.08% (Prev: 2.93%)
• Pricing intentions: 60.3 (Prev: 53.5)

It’s entirely understandable that business confidence took a sharp blow in March, with the Iran conflict kicking off at the end of February. It’s also unsurprising that the later responses were much more downbeat than the earlier ones, as the consequences for this part of the world started to come to light over the course of the month.

The forward-looking measures of confidence and business intentions were all down substantially in March compared to February, although they generally remained net positive. Firms’ own-activity expectations, which has typically had the closest correspondence with GDP growth, fell from 53% to 39%, the lowest level since last August (and the late-month responses were closer to the lows seen in mid-2024).

Notably, this weakness also extended to the backward-looking measures. Businesses’ activity compared to a year ago was a net 17.5% positive – but the early responses were similar to the net 23.4% in February, while the late-month responses were close to zero. There is probably a degree of sentiment going into these responses as well, but it is plausible that some businesses have seen such an immediate impact from the Iran conflict – for instance, the surge in fuel prices is likely to have weighed on consumers’ spending power elsewhere in the retail sector.

The pricing measures in the survey were unsurprisingly higher. Expected inflation for the year ahead rose to 3.08%, the highest since July 2024. A net 85% of firms expect their own costs to increase in the coming months, and a net 60% intend to raise their prices – in both cases the highest readings since early 2023.

These diverging messages on activity and inflation – typical for a supply-side shock such as a spike in oil prices – leave the Reserve Bank with a delicate balancing act. An initial surge in the inflation rate is unavoidable, but the key is whether the conditions are in place for repeating rounds of price increases.

And notably, while firms are aiming to pass on the fuel price shock into their own prices, that doesn’t extend to passing it on into bigger wage increases – both the past and expected wage growth measures in the survey fell compared to February. Above-average unemployment and limited bargaining power for workers is a crucial difference between today’s situation and the inflation surge that we saw in 2021-22.

We are now officially entering the fifth week of the US-Iran-Israel conflict, which sent bombs flying all over the Middle East, but more concerningly, sent Global Assets flying all over.

The main culprit was Crude Oil prices – rallying about 50% since its Monthly open, the commodity hasn't failed to contribute its fair part in overall volatility.

After sustaining a broad, inverted correlation with most asset classes and currencies, this trend appears to be abating – Traders are now really looking to relax their preceding angst with the US entering into more consistent negotiations with their enemy-counterpart in the Islamic regime, and Israel also prepares for final waves of attack to dampen the military reconstruction efforts.

Black Gold is now at a spot where uncertainty is priced in, leaving only a premium for the proper lack of supply that would traditionally go through the infamous Strait of Hormuz.

Brent has been stuck above $110 since the weekly open, and WTI remains well above $100.

WTI 4H Chart – Source: TradingView. March 30, 2026

Key levels to watch for WTI:

To the upside:

• $106 ~ Closing above could maintain further bullish pressure
• $110 ~ Psychological level not seen since the mid-March spike
• $120 ~ War highs, above this, things could get catastrophic for the economy

To the downside:

• $100 ~ Correcting back below would boost the current ease in sentiment significantly
• $90 ~ Short-term momentum turns bearish for the commodity, Markets should pick up their rebound
• $85 ~ Any move below this would confirm that the situation is indeed not worsening, best sign for Markets – Every asset becomes a buy on a daily close below.

Oil rising isn't such a surprise to most of us, but the more peculiar change in today's flows comes from the fact that at a despite this rise, Bonds are rallying (yields lower – implying lower inflation expectations), Stocks bounced, but seem to remain under pressure (at least, not worsening for now) and Metals have formed what a more consistent bottom.
finviz perf 3003

An Unfamiliar Session in Markets – Courtesy of Finviz

If anything was dampening Market mood throughout last week, it was the fact that failed diplomatic attempts could not generate a much larger continuum of tranquility.

But if the current, more realistic, conversations really turn into something positive, the 5-week period could be precise, and next week could be a great opportunity to join a bounce.

It is, of course, very early to say, considering that the US President and his Administration are so unpredictable, and it would be a mistake to assume that the Iranian regime is not.

In any case, month-end is approaching and could bring significant changes to the flows Participants have been accustomed to throughout this long and crazy March.

US Treasuries are rallying, the most optimistic sign

US Bonds (and Fixed Income in general) were among the worst performers across all asset classes this month, under intense pressure from rising inflation expectations.

With the tumble in Fixed-Income (and rising yields), Bond Vigilantes were pricing out all types of Rate Cuts across the globe, implying that the repercussions of rising Oil would prevent lower rates and even lead to some Monetary Policy rises (as seen in Europe and England).

Why is it important to check bonds in this environment? This asset class is the most reactive to risk news and inflation expectations – If they ease, other assets will be subject to much less constraints (as Stocks tend to see delayed bounces in such an environment).

US Bonds since beginning March – Courtesy of Finviz

Despite their morning bounce, they still have a lot to recover, and their bounce is proving challenged by the fresh bid in Oil.

• For the 30Y Yield, keep a close eye on 5.00% to the upside, 4.75% to the downside.
• For the 2Y Yield, 4.03% to the upside (+ hikes priced in) and 3.75% to the downside.

Metals rebound but still under pressure

Metals performance since last Monday – Source: TradingView

Metals have indeed marked their bottom, but the rest will be to see if they can actually maintain a higher path for longer.

Their nature as diversification asset hold them in the middle of two different narratives –

• Are they going to rally from the lower hike pricings?
• Are they going to resume their drops from the drop in uncertainty?

In this mix of fate, it seems that rangebound conditions may prevail in the precious commodities until a breakout follows.

The US Dollar remains on top of its game

Despite the easing narrative, the US Dollar remains a top-dog in this weekly open.

The Dollar Index is pointing towards a breakout, but failing here may also form a double-top, so expect this monthly close to be a significant indicator for what's to come for FX Markets in April.

Dollar Index 4H Chart – Source: TradingView. March 30, 2026

The direction is for now difficult to predict, with the latest rally being very persistent – So the best is to wait for confirmation.

Rejecting back in the 100.30 resistance should see continuation to the downside.
Breaking and closing on the month above 100.60 could lead to a larger USD breakout.

The current FX Session – Courtesy of Finviz

Markets are repricing an imminent FX Intervention for the JPY, prompting its outperformance in today – Apart from it, the US Dollar is flawless in its daily rally.

Month-end flows (throughout the session tomorrow) will be a preview of what's to come!

Safe Trades and keep track of the conflict progress throughout this week!

• Geopolitical shocks, including the Middle East conflict and $100+ oil, have created inflationary pressure, pushing the Federal Reserve toward a "higher-for-longer" interest rate scenario.
• US equities are facing a valuation test due to the lingering effects of the 2025 tariff regime.
  The Nasdaq 100 is dealing with "AI exhaustion," though a $700 billion structural increase in AI capital expenditure in 2026 provides a fundamental floor for the tech sector.
• The Dow Jones Industrial Average is positioning as a potential "value haven" and could lead a Q2 recovery.

As we pull the curtain on a turbulent first quarter, the narrative for US equities in Q2 2026 is shifting from "all-out AI" to a more nuanced, "pensive" reality. The bullish momentum that defined 2025 has hit a significant roadblock, primarily driven by the escalation of conflict in the Middle East and the closure of the Strait of Hormuz.

For market participants, the question isn’t just whether the trend is still your friend, but whether you have the stomach for the "TACO" trade (Trump Always Comes Off), the market's growing belief that the administration will pivot to prevent a total equity meltdown.

The Macro Backdrop: Oil shocks and a Fed cornered

The primary headwind for Q2 is undeniably the energy market. With Brent crude spiking above $100/barrel, headline inflation is rearing its head again. S&P Global warns that while the US is better insulated as a net exporter than in decades past, the "inflationary consequences" are unavoidable.

This leaves the Fed in a precarious position. Markets are now pricing in a "higher-for-longer" scenario as the central bank balances supply-driven inflation against a cooling labor market. While a 25-bps cut is still penciled in for late 2026, the Q2 outlook remains a "growth scare" rather than an imminent recession.

The legacy of "Liberation Day" and the 2025 tariff regime

To understand the price action of Q2 2026, one must think of it against the shift in trade policy that occurred on April 2, 2025, known as "Liberation Day."

This executive order introduced a sweeping 10% reciprocal tariff on all imports, with significantly higher rates for countries like China (up to 45% when combined with previous measures), Canada, and Mexico. The immediate reaction in 2025 was a historic "shock to the system," causing the S&P 500 to flirt with bear market territory and the Nasdaq to enter one briefly in April 2025.

However, the "Liberation Day" theme in 2026 has changed from a source of panic into a valuation test.

Many of the leading technology firms, particularly the "Magnificent Seven," are currently trading at valuation levels that are nearly as attractive as the troughs reached during the initial 2025 tariff sell-off. The lessons of 2025 taught the market that while tariffs introduce policy uncertainty and alter expected returns, the resilience of the US economy, boosted by tax rebates and a pivot toward domestic manufacturing can eventually stabilize sentiment.

As we move through Q2 2026, the question is whether the market can repeat this stabilization in the face of a secondary geopolitical shock.

US Indices: Technical Levels and the Search for a Floor

The S&P 500 cash index found major resistance at the 7,000 level in late January 2026, a psychological and technical barrier that triggered a significant reversal. Since then, the index has been searching for a durable support zone.

• Primary Support at 6145: This support zone is directly linked to the price action seen post-Liberation Day in 2025. It serves as a historical "floor" where institutional buyers have previously stepped in.
• The 6000 Level: This level may come into play and represents a crucial area for bulls to defend. A failure here would open the door to a deeper correction.
• Outlook: The current sentiment is one of "opportunistic bullishness." Rather than chasing the bearish momentum, market participants should look for signs of a turn higher near these key support levels, supported by the expectation of a market-friendly Federal Reserve.

Something that piqued my interest this week was historical performance based on the first 59 days of the year. The table below outlines the 20 worst starts to a year for the S&P 500 (based on the first 59 trading days) from 1928 through 2026.

The most striking observation is that a bad start does not guarantee a bad year. In fact, the market often staged massive recoveries.

Positive Finishes: Out of the 19 completed years on this "Worst Starts" list, 11 of them (58%) ended the full calendar year in positive territory.

The "V" Recovery: In many cases, the "Day 60 to Year-End" returns were not just positive, but explosive.

For example:

• 1933: Fell -12.6% early, then rallied +64.8% to finish up +44.1%.
• 2020: Fell -18.6% (the worst start on record), then rallied +42.8% to finish up +16.3%.

Source: Creativeplanning, LSEG

The Nasdaq 100 (NDX): AI Exhaustion vs. Structural Growth

The Nasdaq 100 is currently grappling with "AI exhaustion," as the initial frenzy surrounding artificial intelligence has given way to a more sober assessment of valuation and capital expenditure. The weekly chart has become difficult to justify as bullish in the short term, as price action breaks through established support levels.

Major Support at 22500: This zone represented major resistance in 2025 and is now the first line of defense for the tech sector.

The 20000 Psychological Handle: A major zone spanning from 20,000 to 20,224, which aligns with a 61.8% Fibonacci retracement of the recent multi-year move. This is arguably the most critical support level for the NDX in 2026.

Fundamental Counterpoint: Despite technical weakness, the "AI data-center build" remains in its early stages. Top technology firms are on track to spend $700 billion on capex in 2026, a 36% year-over-year increase. This acyclic investment provides a fundamental "floor" for the index that traditional technical analysis might overlook.

Nasdaq 100 Daily Chart, March 30, 2026

Source: TradingView

The Dow Jones Industrial Average: A Potential Value Haven

The Dow Jones Industrial Average is viewed as offering a potentially more attractive backdrop for bullish continuation compared to the tech-heavy indices. Having stalled at the 50,000 handle, the Dow is testing support levels that could offer a more stable entry point.

• Key Support at 45244: This level represents a 100% measured move of the 2022 sell-off and is a major technical pivot.
• Secondary Support at 43,325: A prior resistance-turned-support zone that has historical significance.
• Outlook: If buyers can stage a defense near the 45,000 psychological level in early Q2, the Dow may lead a broader market recovery as investors rotate out of overvalued growth and into resilient industrial and financial names.

Dow Jones Daily Chart, March 30, 2026

Source: TradingView

GBPUSD: ⬇️ Sell

• GBPUSD broke support level 1.3220
• Likely to fall to support level 1.3100

GBPUSD currency pair recently broke below the strong support level 1.3220 (which has been reversing the price from November of last year, as can be seen below).

The breakout of the support level 1.3220 should accelerate the active long-term impulse wave 3 from the end of March.

Given the strongly bullish US dollar sentiment, GBPUSD currency pair can be expected to fall further to the next support level 1.3100 (former strong support from November).

Federal Reserve Chair Jerome Powell struck a tone of “strategic ambiguity” in remarks at a Harvard event, signaling that policymakers are not yet ready to respond to the current oil-driven supply shock, even as risks to both sides of the mandate are building. As the Iran war extends, Powell acknowledged the Fed could eventually face difficult trade-offs, but emphasized that the economic impact remains uncertain.

“The tendency is to look through any kind of a supply shock,” Powell said, highlighting the Fed’s baseline approach to energy-driven inflation. At the same time, he emphasized that such an approach depends critically on expectations remaining anchored. “Inflation expectations do appear to be well anchored beyond the short term,” he noted, while adding that policymakers would “carefully monitor” whether that remains the case.

A key constraint is the well-known lag in monetary policy transmission. “Monetary policy works with long and variable lags,” Powell said, warning that by the time tighter policy takes effect, “the oil price shock is probably long gone.” This reinforces the Fed’s reluctance to react prematurely to what could still prove to be a temporary supply-driven spike in inflation.

For now, Powell indicated that policy is “in a good place… to wait and see”. However, the balance could shift quickly if inflation expectations begin to drift higher or if second-round effects emerge. Until then, the Fed remains on hold, navigating between supply shock risks and policy timing constraints.

Markets

No post-weekend gamechanger as the war between the US and Israel on the one hand and Iran on the other hand enters its fifth week. There were few indications for a real de-escalation anytime soon. For now, the US didn’t start any ground invasion. Still, a potential seizure of the Irian oil Island Kharg by US forces remains one of the options being considered. At the same time, the Iran allied Houthi’s from Yemen actively joining strikes against Israel and Iran attacking important aluminum facilities in Abu Dhabi and Bahrain only suggest ever growing risk to more supply chain disruptions including from a hampered passage in the Suez Canal/Red Sea. US president Trump in morning comments on social media also gave mixed signals at best. He indicated that the US is in serious discussions with the (new) regime in Iran, but that the US can still destroy Iranian energy infrastructure if the Strait of Hormuz isn’t immediately open for business. Oil prices, still our main pointer on markets’ assessment of supply chain disruptions don’t preposition for improvement. Brent at $115+ is testing the highest levels since the start of the conflict. The reaction on interest rate markets was a bit different from the earlier stages of the conflict. We didn’t see the exact trigger, but markets today apparently focused a bit more on downside growth risks rather than upside inflation risks. US yields decline between 8 bps (5-y) and 5 bps (30-y), building on a downside momentum that already started on Friday. On Thursday, US money markets priced a > 50% chance of a Fed rate hike further out this year. Currently, this scenario is again priced out. European yields follow the US trend, albeit at a distance, with German yields easing between 5.5 bps (5& 10-y) and 4 bps (2-y). Question remains whether the likes of the ECB will have the luxury to disregard higher inflation/ inflation expectations to cope with a potential negative impact on growth. Preliminary German inflation data for March confirmed the feared for jump in inflation with HICP inflation accelerating to 1.2% M/M and 2.8% Y/Y (0.4% M/M and 2.0% in February), marking the highest level since January last year. The benign reaction on bond/yields’ markets also gave some (remarkable?) relief to equity markets. The Eurostoxx 50 ‘rebounds’ 0.5%. US indices add about 0.70-0.90% at the open. Constructive but not enough to reverse Friday’s sell-off. The technical picture of most indices remains fragile anyway (e.g. S&P 500 sub 6500 area). Also a bit remarkable, despite the substantial decline in US yields (bigger than in EMU or the UK) and the rebound in equities (risk-on!?), the dollar outperforms. DXY (100.4) regains the 100-mark with the post-crisis top (100.54) within reach. EUR/USD drops further from 1.1515 to 1.1475.The yen is the exception to the rule. USD/JPY this morning at 160.46 tested the highest level since July 2024, but the yen rebounded after Japanese vice minister for international affairs Atsushi Mimura warned authorities will take decisive action if they see speculative action picking up (USD/JPY currently 159.5).

News & Views

Belgian inflation slowed to 0.12% M/M in March, but that still pushed annual inflation up from 1.45% Y/Y to 1.65% Y/Y. The most significant price increases in March concerned motor fuels and package holidays. However, electricity, meat, alcoholic beverages, hotel rooms and plane tickets have had a decreasing effect on the index. Energy inflation stood at -4.41% Y/Y from -7.89% in February. Other details showed food inflation at -0.88% Y/Y (from +0.68% Y/Y) and services prices going from 4.75% Y/Y to 4.86% Y/Y. Rent inflation decreased from 3.47% to 3.39%. Overall core inflation, excluding energy and unprocessed food stabilized at 2.71% Y/Y (from 2.78%)

The European Commission’s Economic Sentiment Indicator (ESI) declined from 98.2 to 96.6 for the eurozone. The Employment Expectations Indicator (EEI) fell from 98.8 to 96.4. Adding to the decline of February, the marked deterioration of economic sentiment in March drove both indicators away from their long-term average of 100. Consumer confidence plummeted from -12.3 to -16.3, the lowest level since October 2023. On the business side, construction confidence was moderately up while industry confidence remained broadly stable. Services confidence fell slightly with the biggest hit going to retail trade confidence. Managers’ selling price expectations were sharply up in all four business sectors (beyond long-term average), and strikingly so in industry. Consumers’ perceptions of price developments over the past twelve months increased moderately, but their expectations about price developments for the next twelve months surged.