Energy Price Shock Deepens as Large-Cap Growth Extends Losses and Global Growth Forecasts Deteriorate

Weekly Market Commentary | Week of Mar 30^th, 2026

A Recap of Economic and Financial Trends from the Prior Week

By: Michael Horvath, The Quinnipiac University Global Economics Research Team

Last Week in Review

• U.S. business activity growth slowed to an 11-month low as input costs rose at the fastest pace in 10 months, while consumer sentiment fell sharply

• The S&P 500 and Nasdaq declined for a fifth consecutive week as large-cap growth continued to underperform, while small and mid-cap indexes snapped four-week losing streaks

• European markets stabilized modestly, though the OECD cut its eurozone growth forecast and the ECB signaled readiness to raise rates if energy-driven inflation persists

Economic Recap

U.S. economic data last week pointed to a simultaneous slowing of activity and acceleration of price pressures. S&P Global's Flash Composite PMI fell to an 11-month low of 51.4 in March, down from 51.9 in February, driven primarily by weaker services activity while manufacturing output strengthened modestly. The report highlighted a notable pickup in inflationary pressures, with input costs rising at the fastest pace in 10 months and firms passing through higher prices at the quickest rate since 2022, with businesses widely attributing the increase to higher energy costs and supply disruptions linked to the Middle East conflict. Employment declined slightly, marking the first fall in over a year. Initial jobless claims for the week ended March 21 came in at 210,000, a modest increase from the prior week's 205,000, while continuing claims decreased by 32,000 to 1.819 million, the lowest level since May 2024.

Internationally, the OECD lowered its eurozone growth forecast for 2026 to 0.8%, down from its prior estimate of 1.2%, citing the Middle East conflict's effects on costs and demand, and cut its UK forecast from 1.2% to 0.7%. Germany's Ifo Business Climate Index fell to 86.4 in March, its weakest level since February 2025, while the S&P Global Eurozone Composite PMI fell to 50.5 from 51.9, with new orders contracting for the first time since last summer. In Japan, the nationwide core CPI rose 1.6% year over year in February, below the consensus forecast of 1.7% and down from 2.0% in January, with the slowdown largely attributable to government energy subsidies. China's industrial profits jumped 15.2% in the first two months of 2026 from a year earlier, though the data predates the outbreak of the Middle East conflict.

Market Recap

Source: JPMorgan Asset Management, “Weekly Market Recap” (March 30th, 2026). (Chart © JPMorgan Asset Management. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)

U.S. equity indexes finished a volatile, headline-driven week mixed, as geopolitical developments, oil price volatility, and continued pressure on large-cap technology stocks dominated sentiment. The S&P MidCap 400 and Russell 2000 closed the week higher, both snapping four-week losing streaks, while the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all finished lower for a fifth consecutive week. The S&P 500 fell 2.10% on the week and is now down 6.68% year to date, while the Nasdaq declined 3.22% and is now down 9.73% year to date. Large-cap growth continued to bear the brunt of selling pressure, with the Russell 1000 Growth declining 3.45% on the week and now down 12.66% year to date, while the Russell 1000 Value fell a more modest 0.51% and remains up 0.32% year to date.

Internationally, the MSCI EAFE rose 0.09% on the week and MSCI EM declined 1.73%, with the European STOXX Europe 600 advancing a modest 0.35%. Among European indexes, Italy's FTSE MIB rose 1.26% and France's CAC 40 gained 0.47%, while Germany's DAX slipped 0.29% and the UK's FTSE 100 added 0.49%. In Japan, the Nikkei 225 finished flat and the TOPIX gained 1.1%, as investors monitored the yen's approach toward JPY 160 against the U.S. dollar, a level that prompted multiple currency interventions in 2024. U.S. Treasuries were volatile, finishing close to unchanged.

Market Themes

ECB Shifts Toward Rate Hike Readiness as Energy Inflation Upends Global Central Bank Calculus

The European Central Bank signaled a meaningful shift in its policy posture last week, with President Christine Lagarde emphasizing that the institution stands ready to make changes to its policy at any meeting if required in response to higher energy prices, while cautioning that markets are being overly optimistic about the economic impact of the conflict. The shift reflects a broader recalibration across major central banks, as energy-driven inflation forces policymakers who were recently easing rates to consider tightening instead. In Japan, the Bank of Japan left rates unchanged at its March meeting but kept the door open for a possible April rate hike, even as officials remain focused on wage-driven rather than commodity-driven inflation. Japan faces particularly acute pressure given its heavy reliance on imported energy, with Finance Minister Satsuki Katayama warning that authorities are prepared to take bold steps in response to sharp currency moves, as the yen approached JPY 160 against the U.S. dollar. Across Asia, South Korea shifted into crisis mode with a bond buyback program to stabilize markets, while Indonesia and India deployed targeted fiscal measures to cushion the impact of higher energy costs on households and sovereign finances.

China Navigates the Energy Shock Through Domestic Policy Action and Shifting Trade Posture

China responded to the energy supply shock with a combination of domestic price controls and a recalibrated trade posture. The National Development and Reform Commission intervened to cap domestic gasoline and diesel price increases at approximately 10%, roughly half the increase expected under the government's pricing mechanism, in recognition that China is a net oil importer with approximately 45% of its shipments transiting the Strait of Hormuz. Simultaneously, China's Ministry of Commerce launched six-month investigations into U.S. supply chain and renewable energy practices ahead of a planned Xi-Trump summit in mid-May. Thus, signaling continued bilateral trade friction even as Premier Li Qiang struck a more conciliatory tone at the China Development Forum, acknowledging concerns about China's large trade surplus and pledging to widen services sector access and boost imports. The combination of strong pre-conflict industrial profit growth of 15.2% in the first two months of 2026, a record trade surplus of USD 213.6 billion, and aggressive technology stock gains tied to the OpenClaw AI agent adoption underscore that China's underlying economic momentum remains intact even as the external environment grows more complex.

Chart of the Week

Source: BlackRock Investment Institute with data from Ember and International Energy Agency World Energy Balance, "Highly Exposed: Share of Population Living in Net Importers by Fuel Type, 2022," April 2025. (Chart © BlackRock Investment Institute. Used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)

The chart illustrates the share of the global population living in net energy-importing countries, broken out by fuel type as of 2022. Approximately 79% of the world's population lives in countries that are net importers of oil, approximately 76% live in net coal-importing countries, and approximately 62% live in net natural gas-importing countries. In total, approximately 74% of the global population resides in countries that are net energy importers across all three fuel types combined. The data underscores the breadth of global exposure to the current Middle East energy supply shock, with nearly 75% of humanity living in net energy importing nations. The inflationary and growth consequences of a sustained disruption to Strait of Hormuz shipping extend well beyond the economies most immediately affected. The chart provides important context for why the current conflict has repriced inflation expectations and forced central bank policy reassessments simultaneously across such a wide range of economies and regions.

Market Outlook

Markets enter the week of March 30 facing a binary set of outcomes centered on the trajectory of the Middle East conflict and the approach of the Good Friday jobs report. On the data front, consumer confidence, JOLTS job openings, ISM manufacturing, and the ADP employment survey will provide the first meaningful reads on economic conditions since the energy shock intensified. The March jobs report will be released Friday, April 3, though markets will be closed for Good Friday and unable to respond until the following Monday. Economists expect the economy to have added approximately 57,000 jobs in March, a significant recovery from the prior month's decline of 92,000. Q1 2026 earnings season opens after the Easter weekend, with investors focused on corporate guidance in the context of high energy costs, supply chain disruptions, and geopolitical uncertainty. FactSet estimates year-over-year earnings growth for the S&P 500 of 13.0% for Q1 2026, which would mark the sixth consecutive quarter of double-digit earnings growth, though forward guidance from management teams will be closely scrutinized given the difficulty of projecting the conflict's duration and economic impact.

Calendar Events

Economic Data:

• Mar. 31 (Tue): Chicago PMI (Mar); Consumer Confidence (Mar)

• Apr. 1 (Wed): ADP Employment Survey (Mar); ISM Manufacturing (Mar); Retail Sales (Feb)

• Apr. 2 (Thu): Initial Jobless Claims (Mar 28)

• Apr. 3 (Fri): March Jobs Report; ISM Services PMI (Mar) — markets closed for Good Friday

Major Corporate Earnings:

• Mar. 31 (Tue): Nike Inc. (Q3 2026); McCormick and Co. (Q1 2026)

Sources

J.P. Morgan Asset Management. "Weekly Market Recap." J.P. Morgan Asset Management. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/

J.P. Morgan Asset Management. "Weekly Market Recap PDF." J.P. Morgan Asset Management. https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/market-insights/wmr/weekly_market_recap.pdf

J.P. Morgan Asset Management. "Economic Update." J.P. Morgan Asset Management. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/economic-update/

T. Rowe Price. "Global Markets Weekly Update." T. Rowe Price Insights. https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html

BlackRock Investment Institute. "Weekly Investment Commentary: Mideast Shock Fuels Investing Themes." BlackRock, March 30, 2026. https://www.blackrock.com/corporate/literature/market-commentary/weekly-investment-commentary-en-us-20260330-mideast-shock-fuels-investing-themes.pdf

BlackRock Investment Institute. "Weekly Commentary Archives." BlackRock. https://www.blackrock.com/corporate/insights/blackrock-investment-institute/archives

Apollo Academy. "The Daily Spark." Apollo Academy. https://www.apolloacademy.com/the-daily-spark/

MarketWatch. "Economic Calendar." MarketWatch. https://www.marketwatch.com/economy-politics/calendar

Yahoo Finance. "Earnings Calendar." Yahoo Finance. https://finance.yahoo.com/calendar/earnings/