Energy Markets Eased Temporarily; But Sentiment Remain Fragile

Ultima Markets Daily Market Insights – March 5, 2026

Global markets remain sensitive to developments in the Middle East following rising tensions between the United States and Iran earlier this week. However, the energy market is finally seeing a slight cool-off in its parabolic rise following President Trump’s announcement offering US Navy escorts for commercial vessels, draining some of the massive geopolitical risk premium that had built up over the week.

Simultaneously, Wall Street caught a much-needed lifeline from the latest batch of US economic data. Solid ADP employment numbers and resilient Services PMI data sparked a relief rally across major indices.

US-Iran Tensions: US Navy Escorts Ease Oil Panic

The explosive rally in the energy sector hit a pause yesterday following a major geopolitical counter-move from Washington. President Trump announced that the US Navy will actively escort commercial oil tankers through the Strait of Hormuz and other critical Middle Eastern choke points.

Although the immediate threat of supply destruction has been taken off the table, the pace of oil price gains has slowed, but prices still remain highly elevated.

Both WTI and Brent continue to trade near their highs, retaining a significant risk premium. In the near term, without any clear de-escalation, oil will likely remain elevated due to the ongoing tensions.

UKOUSD, H4 Chart | Ultima Markets MT5

Brent crude continues to find immediate support near $80.00 despite the pullback following the Navy escort headlines. However, as long as this level holds, the market remains in a high-level consolidation with a bullish bias. July 2024’s high of $88.00 serves as the next major ceiling for now.

Technically, we need to see a clear break below the $80.00 mark to signal a true unwinding of the war risk premium. Without that, the risk premium is still there.

US Equities: Macro Data Sparks Rebound, but Downside Risks Remain

Global equity markets, particularly in the US, finally found an excuse to buy the dip. Following days of relentless selling pressure, a combination of easing oil prices and solid US macroeconomic data triggered a sharp relief rally.

Both the US ADP Non-Farm Employment Change and the Services PMI came in robust enough to ease fears of an imminent recession, yet balanced enough to prevent outright panic over inflation.

• US February ISM Service PMI: 56.1 vs 5.35 Consensus;
• February ADP Non-Farm: +63K vs 50K Consensus

While the rebound looks impressive intraday, the broader structural damage has not been erased. The market remains highly vulnerable to sudden headline shocks, and this rally could easily be a “bull trap” if Friday’s official NFP report comes in too hot, cementing the Fed’s “Higher for Longer” narrative.

SP500, Daily Chart | Ultima Markets MT5

Despite successfully defending the 6,700 area, the S&P500 overall technical outlook remains trapped in a high-side consolidation, with 6,900 now acting as the major resistance level that could cap any bullish momentum.

For now, there is no clear catalyst to push the indices higher beyond their record-high range. Even if the market avoids a deeper correction, near-term upside may remain firmly capped.

The Japanese Yen: Safe-Haven Failing?

In a textbook “Risk-Off” environment involving a Middle Eastern war, the Japanese Yen (JPY) usually surges as capital flees to safety. However, this time, the Yen is struggling to catch a bid.

The Yen’s safe-haven appeal is being entirely neutralized by the massive yield differential between the US and Japan. With the Fed signaling “Higher for Longer” and US data (like yesterday’s ADP and PMI) remaining strong, US Treasury yields are highly attractive.

However, if we see broader selling pressure in global equities that catches the market off guard again, the Yen could regain its strength, especially if the BoJ takes an aggressive hawkish stance in its March meeting.

USDJPY, Daily Chart | Ultima Markets MT5

USD/JPY continues to grind higher, supported by the yield gap. However, the pair is approaching the key 157.00 – 158.00 resistance zone. A breakout here would signal continued Dollar dominance, while a breakdown from these levels could ignite Yen safe-haven flows.

Particularly, the Yen would likely strengthen against currencies like the Euro and the Pound amid the ongoing war tensions.

What to Watch Today

• US Initial Jobless Claims (8:30 AM ET): With the ADP report out of the way, this weekly data point provides the final pulse check on the US labor market before Friday’s massive NFP release. A sudden spike in unemployment claims could quickly kill yesterday’s equity rally.
• Pre-NFP Positioning (All Day): Expect erratic, choppy price action as institutional traders square their positions ahead of tomorrow’s Non-Farm Payrolls. Volume may dry up in the US session as the market waits for the ultimate verdict on the Fed’s rate path.
• Geopolitical Updates: While Navy escorts have eased oil fears, the military conflict between Israel, Iran, and the US remains highly fluid. Any sudden clashes involving US naval forces will instantly re-ignite the panic.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.