MPC Morning Call 9th March 2026 – Soft Labour market and higher oil prices deliver 1-2 punch to Investor sentiment
Global markets endured a bruising week as the escalating conflict in the Middle East sent oil prices surging to multi-year highs, while a shockingly weak US jobs report added a second blow to investor confidence, raising the spectre of stagflation and leaving policymakers and…
WATCH ON YOUTUBE MPC Morning Call 9 th March 2026 – Soft Labour market and higher oil prices deliver 1-2 punch to Investor sentiment Global markets endured a bruising week as the escalating conflict in the Middle East sent oil prices surging to multi-year highs, while a shockingly weak US jobs report added a second blow to investor confidence, raising the spectre of stagflation and leaving policymakers and markets in an increasingly uncomfortable position heading into the new week. Middle East Conflict Drives Oil Surge and Inflation Fears The dominant market theme of the week was the rapidly intensifying conflict involving the US, Israel and Iran, which erupted over the prior weekend and has since spread across the broader Middle East and Persian Gulf. US crude futures (WTI) surged 12.21% on Friday alone and are up a remarkable 35.63% over the five-day period, with Brent crude rising to US$92.88 per barrel. The spike reflects acute concerns that the Strait of Hormuz — the narrow waterway through which roughly 20% of global oil supply passes — could be effectively closed to traffic. Iran launched fresh waves of missile and drone attacks across the Gulf during the week, hitting or threatening targets in the UAE, Bahrain, Qatar, Kuwait and Azerbaijan, while widespread airspace closures severely disrupted regional air travel. US Secretary of Defense Pete Hegseth warned late Thursday that "the amount of firepower over Iran and over Tehran is about to surge dramatically," while President Trump posted on Truth Social that there would be "no deal with Iran except UNCONDITIONAL SURRENDER." The surge in energy prices has driven average US retail gasoline prices up approximately 27 cents to around US$3.25 per gallon (per Reuters/AAA data), adding directly to consumer price pressures and complicating the Federal Reserve's inflation-fighting mandate. In a move to ease some supply concerns, the US announced it would allow the sale of Russian oil to India for a period of 30 days, though this has done little to dampen surging prices. Dire US Payrolls Report Compounds Stagflation Risk Compounding the market stress was Friday's February nonfarm payrolls report, which delivered a significant negative surprise. The US shed 92,000 jobs last month — one of the largest declines since the pandemic — against economist expectations for a gain of 58,000. The unemployment rate ticked up to 4.4%, while the prior January reading was revised down to 126,000 from 130,000, and December 2025's figure was revised sharply lower to a contraction of 17,000 from a previously reported gain of 48,000. Retail sales for January also came in mixed, with the headline slipping 0.2% month-on-month (better than feared) but the core reading flat (below expectations). The combination of a deteriorating labour market and surging energy prices has fuelled growing stagflation concerns. "A negative payrolls number combined with a jump in oil prices will have traders worrying about stagflation risks," said Brian Jacobsen at Annex Wealth Management. Ellen Zentner at Morgan Stanley Wealth Management noted the Fed is now caught between a rock and a hard place: "Significant weakening in the labor market would support a rate cut, but given the risk that higher-for-longer oil prices could trigger another inflation surge, the Fed may feel compelled to remain on the sidelines." According to the CME FedWatch tool, traders did ratchet up bets for Fed rate cuts following the weak payrolls print, though expectations for total easing in 2026 have declined overall with the rise in oil prices. Wall Street Posts Its Worst Week Since October US equities fell sharply on Friday and recorded their worst weekly performance since October, with the S&P 500 down 1.33% for the session and approximately 2.02% over the week. The Dow lost 0.93% on Friday and fell 2.91% over the five sessions, while the Nasdaq slid 1.51% on the day and 1.27% for the week. The Russell 2000 was the worst performer among US indices, down 2.29% on the day and 4.07% for the week. The selloff was broad and cross-asset — stocks and bonds fell in tandem as oil-driven inflation expectations pushed Treasury yields higher, the opposite of the typical crisis playbook, resulting in the worst combined week for stocks and bonds since the tariff stress of April 2025. The VIX surged toward 30, with the spot price pushing above its three-month futures in the largest inversion in nearly a year. Financial stocks were a notable drag, with BlackRock tumbling 7.7% after its HPS Investment Partners subsidiary enforced redemption limits on its $26 billion private-credit fund — the latest sign of stress in the $1.8 trillion private credit market. Chipmakers also fell after Oracle and OpenAI scrapped plans to expand an AI data centre in Texas. On the positive side, Marvell Technology (MRVL) surged after raising its full-year revenue outlook on accelerating data-centre demand from AI hyperscalers, and Costco (COST) rose 1.58%…
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