Week in review and thoughts for the week of March 30, 2026

Iran update: a second front opens, two smelters hit

The start of this coming week will likely not be much better for US equities. There were number of disturbing developments over the weekend. For starters, a “second front” has now arguably been opened. The Houthis in Yemen joined the hostilities on Saturday and Sunday, firing two missiles at Israel. They very well could step up their attacks further and attempt to interfere with shipping in the Red Sea as well.

For its part, Iran attacked the Prince Sultan air base in Saudi Arabia. It inflicted damage on a $270 million US E-3 Sentry plane that was providing sophisticated tracking capabilities to US military units. Meanwhile, the US is planning to send more troops to the region. It may soon end up with about 17,000 personnel there. This would be enough to take over some key islands in the Persian Gulf. But it is well short of what would be needed to mount a more credible inland invasion.

Among the Iranian strikes that matter most to our markets, attacks over the weekend at two of the Gulf’s major aluminum smelters. The UAE reported that Emirates Global Aluminum’s (EGA’s) Al-Taweelah smelter suffered “significant damage” in an attack. An Aluminum Bahrain (Alba) facility in Bahrain was also hit. (A damage assessment at Alba is now underway.)

Both smelters produced roughly 1.6 million metric tons of metal in 2025. Each had already reduced production after the war started. But we suspect aluminum prices will nevertheless open sharply higher on Monday as we await damage assessment and restart dates. Physical premiums should push higher as well.

Not all the news over the weekend was grim. Iran’s Revolutionary Guards Corps announced it had agreed to allow 20 more Pakistani-flagged ships to pass through the Strait of Hormuz over the weekend. That’s not particularly surprising given Pakistan is hard at work trying to get mediation talks off the ground. Despite several other tankers also getting through last week, flows through the Strait remain restricted.

Equities, energy, and metals

Regarding individual market action, the S&P 500 and NASDAQ each fell by 2.1% and 3.2% on the week, respectively, while the Dow dropped by almost 1%. There were significant losses in communication service names (down 7% on the week) as well as in information technology stocks (down 3.5%). In contrast, smaller caps showed more resiliency, eking out modest gains.

Of course, the energy sector was the standout (up 6.2% on the week). Oil prices finished at $101/barrel basis WTI, while closing above $105/barrel on Brent. Both contracts were up by about $10/barrel vs. last Monday’s close. Natural gas prices finished at just under $3.10, pretty much unchanged week/week.

Base metals and precious metals had relatively decent weeks. In the LME complex, copper and aluminum tacked on about 2% each on the week. Zinc was up by 1.6%, while nickel managed a 1% advance. Lead ended the week flat. Tin was the standout, up by nearly 6%. In precious metals, gold and silver ended with marginal losses, but platinum and palladium sustained heavier losses. US steel prices were firm, as were European quotations. But there was not much going on in the Chinese market.

As we prepare for Monday’s opening, we will be watching the likely upwards spike in both crude oil and aluminum given the Houthi strikes and the Iranian missile attacks on Gulf Cooperation Council (GCC) facilities. We suspect that a stronger dollar will pressure copper lower, along with precious metals. Treasury rates should push higher as well, setting up a soggy start for US equities. As always, prices across a number of complexes will be whipped around by geopolitical headlines, most of which are becoming more dire by the day.

Macro readings and other news from the past week

• US January construction spending came in at -0.3%, with the prior month revised to 0.8% from 0.3%. Residential spending turned weaker perhaps on account of the weather.

• We got several March PMI manufacturing posts last week that made for interesting reading. The S&P Global “flash” Eurozone composite PMI (which covers both manufacturing and non-retail services) fell to a 10-month low of 50.5 in March from 51.9 in February. However, the manufacturing component jumped to 68.6 from 58.0, suggesting that firms could be frontloading orders to get product shipped out. Or, alternatively, they could be looking to build stock given logistical issues. The UK Composite PMI index dropped to 51.0 in March from 53.7 in February. But like the Eurozone, the UK’s manufacturing PMI jumped to 70.2 in March from 56.0 in February, the biggest monthly increase on record since 1992. Germany’s Composite PMI fell to 51.9 in March from 53.2 in February. Service activity slowed to a seven-month low of 51.2. But manufacturing climbed to 51.7, a 45-month high. Finally, Japan’s manufacturing PMI fell to 51.4 in March from a four-year high of 53.0 in February. Orders posted their weakest gain in three months. The Japanese service PMI fell to 52.8 from 53.8 but remains in decent growth territory. Japan’s composite PMI dipped to 52.5 from 53.9 in February.

• Germany’s Ifo business climate index fell to 86.4 in March compared to 88.4 in February. “The fall in the German Ifo index … suggests that the renewed rise in energy prices could derail the tentative recovery in the German economy,” Capital Economics said in a note.

• US Q4 productivity readings were revised down to 1.8% from the previous estimate of 2.8%, while unit labor costs were revised up to 4.4% from 2.8%. Neither number was all that reassuring for the Fed.

• The MBA mortgage applications index continues to head south, down some 10.5% on the latest week.

• The University of Michigan consumer sentiment index for March fell to 53.3 (consensus: 55.5) from the preliminary reading of 55.5. The drop in sentiment was mostly impacted by rising gas prices and falling equity markets.

• OEMs are shifting away from electric vehicles and towards hybrid vehicles, executives at Worthington Steel said on their latest earnings call, citing the removal of the fuel economy mandate and the $7,500 federal tax credit. Worthington Steel’s outlook for the automotive market in 2026 is nevertheless “cautiously optimistic.”

• Chinese industrial firms reported a 15% increase in profits over the first two months of the year vs. last year. However, profits in 2025 as a whole were anemic, up by only 0.6%. Among the sectors reporting the strongest profits were computers, communications, and electronic equipment manufacturing. Non-ferrous metal smelting and rolling industries also did well.

• Copper inventories remain comfortable, now at around 360,000 tons on the LME – an eight year high. Copper stocks in the US remain high as well, at around 530,000 tons. However, Chinese copper inventories are drawing hard, with Bloomberg reporting that stocks across China had their biggest weekly drop this year – down by about 80,000 tons in the week through Monday to 486,200 tons. Fabricators have apparently stepped up purchases due to a “surge” in orders, Bloomberg noted. We suspect that some of this buying was also on account of restocking, especially once domestic Chinese copper prices dipped below the psychologically key level of 100,000 yuan/ton.

* Some banks are trimming their copper price forecasts. Citi said last week that it sees copper falling to $11,000/ton in the next three months compared with its previous target of $14,000. “We expect industrial metals to grind lower while the Hormuz Strait remains closed, as investors discount Fed rate cuts and cyclical growth expectations and continue broad de-risking across risk assets,” Reuters quoted the bank as saying. We should add to Citi’s list the fact that copper inventories continue to mount, as noted above.

* Global crude steel production in February fell 2.2% from a year earlier to 142 million tons, according to World Steel Association data. Crude steel output from China dropped 3.6% to 76 million tons during the month.

This week’s US macro readings

There will be no releases on Monday, but Federal Reserve Chair Jerome Powell and New York Fed President John Williams will each be speaking. On Tuesday, we get the S&P Case Shiller home price index, along with the Chicago PMI for March, February job openings (expected at 7 million, last 6.9 million), and March consumer confidence readings (expected at 88, last 91.2). Wednesday brings us February retail sales (delayed, expected at 0.4%) while the ex-auto number is expected at 0.3% (last 0). ADP payrolls also come out Wednesday (last 63,000), along with March ISM manufacturing (expected at 52, last 52.4). Thursday brings us weekly initial claims (expected at 210,000, same as the week prior) along with the US February trade deficit (expected at -$62 billion, last -$54 billion). On Friday, we get the March non-farm payroll report (expected at 45,000, last -92,000).

We wish all our readers all the best for the upcoming week!