Markets React to Middle East Tensions and Oil Surge
Week Ending March 6, 2026
Markets pulled back last week as investors weighed the potential economic impact of escalating tensions in the Middle East alongside mixed signals from the U.S. labour market.
Volatility picked up as geopolitical headlines drove sentiment, particularly in energy markets. While the overall decline was noticeable, the movements reflected investors adjusting to new information rather than a broad shift in the economic outlook.
Energy markets became the central focus, with oil prices experiencing their largest weekly increase in decades.
Market Overview
Weekly Market Performance (March 2, 2026 to March 6, 2026)
- S&P 500: -2.02%
- Nasdaq Composite: -1.24%
- Dow Jones Industrial Average: -3.05%
- MSCI EAFE International Developed Markets: -6.62%
- S&P/TSX Composite Index: -1.60%
U.S. markets saw the largest declines as investors moved away from risk assets amid uncertainty around the geopolitical situation. International markets were weaker overall, reflecting concerns about energy supply disruptions and global economic stability.
Canada’s market held up somewhat better than many global peers, supported by strength in the energy sector as oil prices surged.
Geopolitical Tensions Drive Market Volatility
Markets began the week under pressure after news of military action in the Middle East. Early declines were quickly met with buying as investors stepped in to purchase stocks at lower prices.
By Tuesday, markets again opened lower as investors considered the possibility that tensions could evolve into a longer-lasting conflict. Comments from the White House indicating that the U.S. Navy would escort oil tankers through the Persian Gulf helped calm markets temporarily and reduced some of the initial panic.
Midweek, technology stocks helped stabilize markets after stronger-than-expected private sector hiring data was released. For a brief period, both the S&P 500 and Nasdaq moved back into positive territory for the week.
However, the relief was short lived.
By Friday, markets came under renewed pressure after the U.S. employment report showed the economy unexpectedly lost 92,000 jobs, raising questions about the strength of the labour market.
Oil Becomes the Central Story
The most dramatic move of the week occurred in energy markets.
U.S. crude oil prices surged roughly 36 percent, marking the largest weekly increase since 1983.
The conflict has disrupted tanker traffic in the Strait of Hormuz, one of the most important energy shipping routes in the world. Roughly 20 percent of global oil shipments move through this narrow passage, making it a critical chokepoint for global energy supply.
Insurance rates for ships traveling through the region are already rising, adding further uncertainty to global energy markets.
Canada and the TSX
Canadian markets declined approximately 1.60 percent during the week, but the TSX held up better than many international markets thanks to its energy exposure.
When oil prices rise sharply, Canadian energy producers often benefit, which can provide support for the broader index.
Sector Snapshot
- Energy strengthened as oil prices surged
- Financials softened alongside global markets
- Materials remained relatively stable
- Technology experienced moderate volatility
Canadian investors are also watching how rising oil prices could influence inflation and future interest rate decisions by the Bank of Canada.
While higher energy prices can benefit parts of Canada’s economy, they can also increase inflation pressures if sustained.
What Is Driving the Market
Several themes shaped trading last week:
- Escalating geopolitical tensions in the Middle East
- A sharp surge in oil prices
- Mixed labour market data
- Increased global market volatility
- Ongoing uncertainty around interest rate paths
Markets are increasingly sensitive to geopolitical developments, particularly when they intersect with energy markets.
Why This Matters
Markets continue to navigate a complex environment.
Geopolitical risks, inflation concerns, and interest rate expectations are all interacting at the same time. While short-term volatility can increase during these periods, the broader economic backdrop still includes steady corporate earnings and moderate growth.
Episodes like this often reinforce the importance of maintaining a diversified portfolio and focusing on long-term strategy rather than reacting to short-term headlines.
Economic Snapshot
Investors will continue watching how the geopolitical situation evolves and whether energy prices remain elevated.
Key areas to monitor include:
- Inflation trends
- Central bank commentary
- Energy market developments
- Employment data
- Corporate earnings guidance
Energy markets, in particular, will remain a key driver of investor sentiment in the weeks ahead.
This Week: Key Economic Data
Tuesday, March 10th
- NFIB Small Business Optimism Index
- Existing Home Sales
Wednesday, March 11th
- Consumer Price Index (CPI)
- Federal Budget
Thursday, March 12th
- Weekly Jobless Claims
- Trade Deficit
- Housing Starts
- Building Permits
Friday, March 13th
- GDP (Q4 First Revision)
- Personal Consumption & Expenditures Index
- Durable Goods Orders
- Job Openings
- Consumer Sentiment
This Week: Companies Reporting Earnings
Tuesday, March 10th
- Oracle
Thursday, March 12th
- Adobe
- Wheaton Precious Metals
"Kindness eases change. Love quiets fear."
- Octavia E. Butler
It can be measured despite lacking length, width, or height. What is it?
Last Week's Riddle: All about but unseen, can be captured but can’t be held, has no throat but can be heard. What is it?
Answer: The wind.
Joanne's son, Matthew, has a suprise visitor...
Footnotes and Sources
1. WSJ.com, March 6, 2026
2. Investing.com, March 6, 2026
3. CNBC.com, March 2, 2026
4. CNBC.com, March 3, 2026
5. CNBC.com, March 4, 2026
6. WSJ.com, March 5, 2026
7. WSJ.com, March 6, 2026
8. CNBC.com, March 6, 2026
9. IRS.gov, July 8, 2025
10. Yogabasics.com, August 27, 2025
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