Global Markets Shaped by Mixed Economic Data and Geopolitical Tensions
Global markets have been significantly influenced by a mix of economic data and heightened geopolitical risks. Investors are closely watching for signals of growth and potential disruptions in energy supplies. In the United States, economic momentum appears to be slowing down as February’s nonfarm payrolls unexpectedly dropped by 92,000, marking the largest decline in four months. This came alongside downward revisions to previous months’ figures, while retail sales declined by 0.2% in January, indicating weaker consumer demand in sectors such as autos, fuel, and discretionary spending.
In Europe, Eurozone inflation increased slightly to 1.9% in February, with core inflation rising to 2.4%, showing persistent underlying price pressures even before the escalation of Middle East tensions. Meanwhile, Australia’s economy expanded by 0.8% in Q4, reflecting its strongest annual growth in nearly three years. However, easing inflation concerns have led to reduced expectations for near-term monetary tightening by the Reserve Bank of Australia. In Japan, the unemployment rate climbed to 2.7%, the highest level since mid-2024, signaling a modest softening in labor market conditions.
Escalating Middle East Tensions Impact Oil Prices
On the geopolitical front, Brent crude oil prices surged more than 8% to around $93 per barrel, reaching their highest level since 2023. This increase was driven by escalating tensions in the Middle East, which raised concerns over potential disruptions to shipments through the Strait of Hormuz, a critical global energy transit route. The surge in energy prices supported safe-haven demand for the US dollar, which remained on track for its strongest weekly gain in over a year despite a slight decline on Friday. The euro and Japanese yen faced pressure due to rising inflation risks for energy-importing economies.
US Labor Market Weakens
The US economy experienced a significant loss of 92,000 jobs in February 2026, marking the largest decline in four months and falling well below expectations for a 59,000 gain. Job losses were concentrated in healthcare (-28,000) due to strike activity, along with declines in information (-11,000), federal government (-10,000), transportation and warehousing (-11,000), and manufacturing (-12,000). Offices of physicians shed 37,000 jobs, while hospitals added 12,000. Social assistance employment rose by 9,000, supported by gains in individual and family services. Revisions also lowered prior data, with December payrolls revised from +48,000 to -17,000 and January trimmed to 126,000, bringing the combined revisions 69,000 lower. Overall, payroll growth remained largely stagnant throughout 2025.
US Retail Sales Decline
US retail sales fell by 0.2% month-on-month in January 2026, marking the first decline since October, following flat growth in December and broadly in line with expectations for a 0.3% drop. The weakness was driven by lower sales at motor vehicle dealers (-0.9%), gasoline stations (-2.9%), electronics and appliances (-0.6%), and clothing stores (-1.7%). However, gains in furniture (0.7%), building materials (0.6%), miscellaneous retailers (2%), and non-store retailers (1.9%) helped lift the control group by 0.3%, suggesting a supportive contribution to GDP. On an annual basis, retail sales increased by 3.2%. The Greenback was last seen trading at 98.986.
Eurozone Inflation Picks Up
Eurozone inflation rose to 1.9% in February from 1.7%, driven by a pickup in core inflation to 2.4% from 2.2%, reflecting stronger price pressures in both services and goods. The data suggests underlying inflation remains persistent even before the Middle East conflict. Looking ahead, energy supply risks linked to the war in the Middle East, particularly higher LNG prices, pose upside risks to inflation, potentially pushing it back to the mid-2% range if disruptions persist. While the ECB remains cautious and vigilant about renewed inflation pressures, policymakers are unlikely to react immediately given current inflation remains relatively contained and the conflict’s impact is still uncertain. The EUR/USD currency pair was last seen trading at 1.1618.
Asia-Pacific Developments
Japan’s unemployment rate rose to 2.7% in January 2026, slightly above both the prior five months and market expectations of 2.6%, marking the highest level since July 2024. The number of unemployed increased by 60,000 to a 48-month high of 1.91 million. Employment declined by 290,000 to 68.17 million, while the labor force fell by 210,000 to 70.08 million. The number of individuals outside the labor force rose by 170,000 to 39.45 million. The participation rate eased to 63.5% from 63.9% in December, though it remained above 63.2% a year earlier. Meanwhile, the jobs-to-applicants ratio edged down to 1.18 from 1.19, signaling a modest softening in labor market tightness.
The USD/JPY currency pair was last seen trading at 157.79.
Australia’s Economy Expands
Australia’s economy expanded by 0.8% in Q4 2025, lifting annual GDP growth to 2.6%, the strongest pace in nearly three years. The prior quarter was revised higher, and growth was broad-based, with public and private demand each contributing 0.3 percentage points. Household spending rose by 0.3%, while the savings ratio increased to 6.9%, the highest since Q3 2022. Private investment grew by 0.7% for a fifth consecutive quarter, and mining and agriculture output rose by 2.6% and 2.5%, respectively, jointly adding 0.6 points to GDP. Economic output per person increased by 0.9% YoY. While solid activity reinforces inflation pressures, weaker consumption and declining unit labor costs moderated market expectations, with implied odds of a March 17 RBA hike easing to 20% from 36% prior to the data. The AUD/USD currency pair was last seen trading at 0.7030.
Commodities Surge Amid Escalating Tensions
Oil prices surged on escalating tensions in the Middle East. Brent crude oil jumped over 8% to around $93 per barrel, reaching its highest level since 2023, as tensions threatened global energy supply. Risks intensified after Qatar warned that Gulf producers could halt output if tankers cannot transit the Strait of Hormuz, a critical route handling roughly 20 million barrels per day. Qatar’s Energy Minister Saad Al-Kaabi also warned that oil prices could surge to $150 per barrel in the coming weeks if tankers are unable to pass through the strait, adding that such a disruption could “bring down the economies of the world.”
Meanwhile, Iran ruled out negotiations, while the US signaled potential measures to stabilize markets, including a possible release from strategic petroleum reserves and allowing India to purchase some Russian crude already at sea. Saudi Arabia also raised prices for Asian buyers and rerouted shipments via Red Sea ports to bypass Hormuz disruptions.
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Kuwaiti dinar
USD/KWD closed last week at 0.30620.
