By the close of last Friday, equity indices fell. The S&P 500 lost 1.33%, and the Nasdaq 100 declined 1.59%. The Dow Jones Industrial Average dropped 0.94%.

Today, futures markets saw another massive sell-off, which strengthened the US dollar. Equities fell amid fears that the sharp rise in oil prices over the past week will accelerate inflation and undermine global economic growth. Clearly, WTI at $120 per barrel is worrying many market participants. The Group of Seven has already said it will discuss a possible coordinated release of oil from strategic reserves to help tamp down the sharp rise in energy prices.

Asia's stock index trimmed its losses to under 4% after earlier plunging as much as 5.6%. US and European equity futures also pared some losses ahead of the European open.

The US–Israeli military campaign against Iran is the principal driver of the oil price surge, and the conflict shows no signs of easing. Both sides appear prepared to intensify operations, so prices are likely to rise further and equities to fall. As noted above, Brent jumped 29% to $119.50 per barrel, extending last week's 28% surge. West Texas Intermediate rose 31%.

Treasury prices fell amid concerns about accelerating inflation, pushing up yields on the 10-year US benchmark. Australia's three-year yields, sensitive to policy expectations, jumped to the highest level since 2011, while German bund futures fell to nearly a 15-year low. Japanese yields also moved higher, with 30- and 40-year yields climbing by roughly 11 basis points.

The sell-off clearly swept through all regions and asset classes as geopolitical tension compounded market strains that were already being felt because of AI disruptions and concerns about potential cracks in credit markets. The escalation left investors in a difficult position, forced to weigh the risk of a return of inflation from higher oil prices against signs of slowing growth in the US labor market.

In other market segments, gold fell under pressure from a stronger US dollar. Talk of higher US interest rates has returned to the fore. The precious metal eased 0.7% to $5,136 per ounce, while silver was essentially unchanged at $84.53 per ounce.

As for a technical outlook for the S&P 500, today's primary task for buyers is to overcome the nearest resistance at $6,627. Clearing that level would signal upside and open the way to a move toward $6,638. Another priority for bulls is to hold control above $6,651, which would strengthen buyer positions. If the market moves lower on a decline in risk appetite, buyers must show up around $6,616. A break below that level would quickly push the instrument down to $6,603 and open the path to $6,590.