USA

The last week was dominated by a growing stagflation-style mix: inflation stayed sticky, labor data remained resilient rather than recessionary, and growth data were revised lower just as energy prices surged on Middle East supply fears. The February CPI showed headline inflation at 2.4% YoY and core CPI at 2.5% YoY, both unchanged from January, while the March 7 initial jobless claims print edged down to 213,000 with the 4-week average at 212,000, signaling a labor market that is cooling only gradually. On the growth side, the BEA revised Q4 2025 GDP down to 0.7% annualized from 1.4%, a sharp slowdown from Q3’s 4.4%, reflecting weaker consumer spending, investment, exports, and government activity. That macro backdrop mattered because equities had to absorb it alongside an oil shock: Reuters reported Brent settling above $100/bbl for the first time since August 2022, with markets increasingly worried that the Iran conflict could keep inflation elevated and delay Fed easing. As a result, U.S. equities ended the week lower: the Dow fell 0.26% on Friday, the S&P 500 0.61%, and the Nasdaq 0.93%, and all three major indices posted weekly losses. Sector performance showed the message clearly: tech led declines, while defensives such as utilities held up better; company-specific disappointments added pressure, including weakness in Adobe and Meta. Net-net, the S&P 500, Nasdaq, and Dow Jones were dragged lower by the combination of softer growth, sticky inflation, and a renewed geopolitical energy shock that undermined risk appetite and pushed investors toward a more defensive stance.

Europe

Europe was arguably the region most exposed to the week’s oil-and-inflation scare because of its import dependence and still-fragile industrial cycle. The clearest hard-data disappointment came from official releases showing that euro area industrial production fell 1.5% m/m in January and 1.2% y/y, underscoring that manufacturing was already weak even before the latest energy squeeze intensified. In the UK, January monthly GDP was flat, with services flat, production down 0.1%, and construction up 0.2%, reinforcing the idea that growth had little cushion heading into the new oil shock. Markets quickly translated those data into a more hawkish rates narrative: Reuters reported that investors swung from expecting cuts to pricing at least one ECB hike this year, as the Iran war reignited fears of imported inflation. Equity performance reflected that macro repricing. The STOXX Europe 600 fell 0.5% on Friday and logged a second straight weekly decline, with all major regional markets lower; energy stocks were the main exception, gaining roughly 5% for the week, while miners and financials underperformed. In the UK, both the FTSE 100 and FTSE 250 fell about 0.4% on Friday and also posted weekly losses. For the continental benchmarks, the same drivers dominated: the DAX 40, CAC 40, and IBEX 35 were pressured by weaker industrial momentum, deteriorating rate-cut hopes, and rising input-cost risk from crude. Company news mattered at the margin — BE Semiconductor and Zalando outperformed on idiosyncratic factors, while Berkeley Group flagged geopolitical risk — but the broader message was macro: European equities de-rated because the region looked most vulnerable to a renewed inflation shock hitting an already soft growth base.

Japan

Japan’s week was shaped by a tension between better backward-looking growth data and a more difficult forward-looking inflation/import-cost outlook. Revised official figures showed Q4 2025 GDP growth upgraded to 1.3% annualized and 0.3% q/q, with stronger private consumption and capex than first estimated, which confirmed that domestic demand had entered 2026 on firmer footing. Household-sector data were more mixed: January household spending fell 1.0% in real terms y/y, while earlier labor data showed real wages rising for the first time in 13 months, suggesting some improvement in income dynamics but not yet a clean handoff to strong consumption. On prices, the BOJ’s February CGPI showed the producer price index down 0.1% m/m, but that print landed before the full pass-through from the latest oil surge; Reuters noted BOJ concern that a weak yen and higher crude could raise imported inflation and complicate policy normalization. Equities focused on the forward risk rather than the GDP revision. By week-end, the Nikkei 225 had fallen 3.24% for the week and TOPIX 2.36%, marking a second consecutive weekly decline, with exporters, autos, and high-beta tech among the main laggards. The Nikkei 225 and TOPIX were thus pulled down not by domestic recession fears, but by the market’s concern that higher energy costs would squeeze margins, erode household purchasing power, and keep the BOJ on a less accommodative path than previously expected. In short, Japan’s macro data improved on the rear-view mirror, but the market discounted a tougher near-term earnings and policy environment.

China

China’s week looked better on inflation optics but weaker on credit momentum and risk sentiment. Official data showed February CPI up 1.3% YoY — the strongest in about three years — helped by Lunar New Year effects and firmer services prices, while the core CPI rose 1.8% YoY; at the same time, the official PPI remained in deflation but the decline narrowed, indicating that factory-gate price pressure was still weak but improving somewhat. The latest official NBS manufacturing PMI for February, released just before the week, had already shown expansion, which supported the narrative that activity was stabilizing. However, the more market-relevant surprise during the week was credit: Reuters calculated that new yuan loans fell to 900 billion yuan in February, well below January’s 4.71 trillion yuan and below expectations, with outstanding loan growth slowing to 6.0%, a record low pace in the Reuters framing. That reinforced investor concern that domestic demand and private-sector risk appetite remain soft, even as Beijing channels more credit toward technology and advanced manufacturing. Equity markets therefore struggled to turn better inflation data into a sustained rally. Reuters reported that mainland China and Hong Kong shares slipped on Friday as investors remained cautious about the Iran war and higher oil prices; that fits the broader weekly picture in which the Shanghai Composite lost momentum and the Hang Seng was more resilient but still volatile, supported selectively by tech and policy themes yet capped by geopolitical risk and weak credit transmission. The takeaway for the Shanghai Composite and Hong Kong Hang Seng was that China entered the week with signs of cyclical stabilization, but the rally was constrained by poor loan data, lingering property-and-demand weakness, and the same global oil shock that hurt risk assets elsewhere.