Germany’s ZEW Indicator of Economic Sentiment plummeted by 58.8 points to -0.5 in March 2026, down from 58.3 in February and far below market expectations of 39, as sentiment was severely impacted by the escalating conflict in the Middle East. This marks the third largest monthly decline in the indicator’s history, following a 65.6-point drop in April 2025 after the US announced new tariffs and a 93.6-point fall in March 2022 in the wake of Russia’s invasion of Ukraine. The intensifying Middle East crisis is driving energy prices sharply higher and fueling inflationary pressures, raising concerns that Germany’s economic recovery could be derailed. The ultimate impact will hinge on the conflict’s duration and severity, but financial experts remain doubtful that a quick resolution is likely. Meanwhile, the assessment of the current economic situation strengthened, with the index climbing 3.0 points to -62.9, surpassing expectations of -67.3.

Futures tracking US equities were higher muted on Tuesday, loosely holding the rebound from the previous session as markets continued to assess risks from higher energy prices and its impact on the economy. Contracts for the three main averages were close to the flatline. Benchmark prices for crude oil, product, and natural gas resumed their increases as defiant rhetoric from the US and strikes in Iran and the GCC maintained the view that the disruptions to energy exports are likely to remain for the meantime. A light data schedule pushes the spotlight to the Fed's rate decision and SEP update tomorrow for a gauge on how the central bank sees the impact of higher energy prices on their rate outlook. Meanwhile, stocks for asset managers were mixed premarket as investors continued to gauge risks on private credit positions amid a wave of redemptions caps. Also, Nvidia inched higher after stating it will generate $1 trillion in revenue by 2027 on AI chip sales.

Bank Indonesia held its benchmark interest rate steady at 4.75% during its March 2026 policy meeting, in line with market expectations. The decision aims to bolster the stability of the Rupiah while keeping inflation within the central bank’s 2026–2027 target of 2.5% ±1%. The Rupiah weakened to Rp16,985 per US dollar on March 16, 2026, a 1.29% decline from end-February levels, as escalating Middle East tensions triggered capital outflows from emerging markets. Meanwhile, the annual inflation rate rose to 4.76% in February 2026 from 3.55% in January, marking its highest level since March 2023. Despite global headwinds, the central bank maintained its economic growth forecast of 4.9%–5.7% for 2026. Indonesia’s GDP grew 5.39% year-on-year in Q4 2025, accelerating from 5.04% in the previous quarter and marking the strongest economic expansion since Q3 2022. The central bank also kept its overnight deposit facility rate at 3.75% and its lending facility rate at 5.50%.

The Reserve Bank of Australia raised its cash rate by 25bps to 4.1% at its March 2026 meeting, following a hike in February, in line with market expectations. In a split decision, the move was driven by a broad set of data pointing to renewed inflationary pressures in H2 of 2025. While some of the pickup is seen as temporary, the board noted modest labour market tightening and stronger capacity constraints than previously assessed. Elevated uncertainty around the Middle East conflict could add to global and domestic inflation risks. Against this backdrop, the RBA expects inflation to remain above target for some time, with risks skewed to the upside, including through expectations, warranting the latest increase. Policymakers stressed a data-dependent approach, monitoring global and financial conditions, domestic demand, and labour trends. They emphasized that policy remains flexible and positioned to respond as needed, with a continued focus on price stability and full employment.

The Japanese yen fell toward 159.5 per dollar on Tuesday, giving back gains from the previous session as verbal interventions from authorities have so far failed to halt the currency’s decline. Finance Minister Satsuki Katayama said recent currency moves do not reflect fundamentals, reiterating warnings that authorities could take action to defend the yen. She added that they are fully prepared to respond at any time given the impact of exchange rates and rising oil prices on everyday life. Meanwhile, Bank of Japan Governor Kazuo Ueda said underlying inflation is gradually moving toward the 2% target. The central bank is widely expected to keep interest rates unchanged this week amid heightened uncertainty over the Iran war’s impact on the domestic economy. Japan has so far rejected US President Donald Trump’s call to send warships to escort oil tankers through the Strait of Hormuz.

Gold edged higher to around $5,020 per ounce on Tuesday but remained close to its lowest level in nearly a month, as traders continued to assess the impact of the Middle East conflict on inflation and monetary policy outlook. The US-Israeli conflict with Iran is now in its third week, with Iran intensifying strikes on energy infrastructure across the region, while President Trump has warned of direct attack on Iran’s oil facilities on Kharg Island. The conflict has kept energy prices elevated, fueling concerns that sustained increases could further stoke inflation and reinforce a hawkish stance among central banks. The Federal Reserve is widely expected to hold rates steady this week, while other major central banks, including the ECB, BOE, and BOJ are also anticipated to maintain their current policy settings. Meanwhile, President Trump reiterated his call for help from other nations to secure the Strait of Hormuz, although several countries have declined to participate.