Week:

S&P500: -3.13% FTSE100: +1.35%  Gold: +1.07% Bitcoin: -4.49%

YTD:

S&P500: -7.14%  FTSE100: 0.76%  Gold: +4.58% Bitcoin: -21.43%

Borrowed Peace Pays Hefty Interest as Oil Retakes $100 and Stocks Crumble

Source: Connect Weekly | Week ending 27 March 2026

This week proved that optimism without substance is just a bill waiting to come due. What began with genuine hope for a diplomatic breakthrough between the US and Iran ended in a painful rout for risk assets, as the reality of a still-blockaded Strait of Hormuz, rising crude prices, and hawkish inflation expectations crushed any momentum that Monday's rally had built.

What drove markets this week

Monday opened with fireworks. President Trump surprised investors with news that the US had begun discussing a deal with remaining Iranian diplomats, sparking a frantic unwind of risk-off positioning. Gold tumbled as low as $4,100 before its 200-Day Moving Average stepped in, stocks surged 3% from their lows, yields eased, and, most importantly, WTI broke below $90 for the first time since March 13. Brent also fell back under $100. It was a genuine repricing for de-escalation, but the momentum did not last. Iran denied any talks were underway, and optimism faded quickly into the close. GBP, AUD, and NZD led FX as the dollar tumbled.

Tuesday was a much calmer affair. Markets digested the weekend swings and settled into a wait-and-see posture. Sentiment remained marginally positive, but without new headlines, there was little conviction. Oil prices crept higher towards $93 in WTI, a warning sign for those betting on sustained calm. Metals, particularly silver, were the standout performers, recovering strongly from Monday's whipsaw. The US dollar, surprisingly, remained resilient despite the overnight correction in crude, a decorrelation that FX traders flagged as notable.

Wednesday brought the turn. President Trump shifted his rhetoric sharply, becoming more aggressive in response to Iran's refusal to make concessions for a longer peace deal. In an address at the White House, the Commander in Chief revealed that Iran had offered a fleet of ten tankers to facilitate indirect negotiations in Pakistan, but the IRGC remained unwilling to compromise on its control of the Strait of Hormuz or its ballistic missile programme. A Wall Street Journal report suggesting the war may end sooner than expected did nothing to invigorate sentiment. Virtually all asset classes fell, with metals down an average of 4%, alongside declines in crypto, stocks, and bonds. Gold and silver breached their $4,400 and $70 psychological levels respectively. The Nasdaq dropped 2%, dragged by META (-7%) and GOOGL breaking key support. The Petrodollar strengthened for a second consecutive session.

Thursday's session marked the interest payment on borrowed tranquillity. The slow, then accelerating, grind higher in oil reshaped the week's trajectory for the worse. WTI retook $100, and the effect on everything else was brutal. Tech, financials, and Mag 7 names dragged equities in another harsh selloff. The cross-asset map showed a classic inflation repricing picture, with crypto and high-beta stocks hurting the most. Bonds again turned lower, unable to withstand the pressure of triple-digit crude. Metals, however, began to rebound, with gold bouncing despite the oil rally for the first time since the war began. That divergence was significant. WTI and the US dollar led the pack, and the session ended with fears of a prolonged conflict firmly in control.

Oil, the Strait, and the only variable that matters

The entire week's price action tells the same story. When oil fell on Monday, everything else rallied. When oil ground higher through the rest of the week, everything else suffered. The inverse correlation between crude and global risk assets remains the dominant force in this market.

Without a concrete resolution to the still-blockaded Strait of Hormuz and a real, long-term guarantee that the conflict will not escalate further, markets simply cannot sustain a rally. Traders need trust to return to persistent buying of already elevated valuations. The initial optimism around peace talks showed just how much pent-up buying power exists if a deal materialises, but it also showed how fragile that bid becomes when hope is all that supports it.

The arrival of a heavy US Marine fleet in the Arabian Sea towards week's end added another layer of uncertainty. Are we heading for boots on the ground, or is this leverage for negotiations? The 4-to-5-week timeline previously mentioned by both Israel and the US is now well underway.

Looking ahead

Bitcoin remains the only major liquid market open through Saturday and Sunday. Green prints would suggest a deal is drawing closer. Large red candles would imply the war could last at least a few more weeks beyond the announced deadline.

Monday's jobs report and the broader weekly outlook will be dominated by Middle East uncertainty. Inflation expectations surged on Friday, and if crude remains above $100, stagflation fears will only intensify. The question of whether central banks will be forced to hike is no longer theoretical.

Energy stocks remain the only sector with consistent positive momentum. Defensive sectors like utilities and industrials showed brief outperformance mid-week but ceded to general pressure by the close. For now, broad sector plays remain more prudent than individual stock picks, as single-name consistency has been virtually non-existent.

The fate of markets lies in the hands of oil and the Strait of Hormuz. Everything else is noise until that changes.

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