16 March 2026

Australian shares are expected to open lower on Monday as escalating geopolitical tensions in the Middle East and a looming Reserve Bank of Australia (RBA) interest rate decision weigh heavily on global investor sentiment.

Losses across Wall Street and European markets at the end of last week are likely to spill over into Asian trading, with ASX futures indicating a weaker start for the local market.

Global Markets Slide as Oil Surges

US stocks ended Friday’s session in the red as investors reacted to rising oil prices and the potential economic fallout from the ongoing conflict involving Iran.

The S&P 500 fell 0.6%, the Dow Jones Industrial Average dropped 0.3%, and the Nasdaq declined 0.9%, marking the third consecutive week of losses for major US indices.

Rising energy prices have been a key driver of market volatility. As of March 13-14th, Brent crude oil climbed to around $103 per barrel, while US crude traded near $98.71, levels not seen in months as supply concerns intensified.  Brent crude oil surged around 3% at the open on Sunday night, climbing above $105 per barrel, marking its highest level since July 2022, as the Middle East conflict entered its third week following US strikes on military facilities on Kharg Island.

Oil prices have surged amid disruptions around the Strait of Hormuz — one of the world’s most critical energy transit routes — heightening fears of further supply shocks.

Analysts warn that persistently high energy prices could amplify inflation pressures and slow global economic growth.

ASX Faces Weak Start

Following the global sell-off, the Australian share market is poised to open lower at the start of the trading week.

Investor sentiment has already weakened amid geopolitical uncertainty and rising energy prices. The ASX 200 fell roughly 4% last week, marking its worst weekly performance since mid-2022.

Energy stocks may outperform as oil prices rise, but technology and growth sectors could face renewed selling pressure as investors shift toward defensive assets.

Mining companies and major exporters may also see volatility as commodity prices react to shifting global growth expectations.

RBA Interest Rate Decision in Focus

Another key factor shaping market sentiment this week is the Reserve Bank of Australia’s monetary policy meeting, scheduled for 16–17 March 2026, with the rate decision due on Tuesday.

The RBA raised the official cash rate to 3.85% in February, and markets are now debating whether policymakers will tighten policy further to curb persistent inflation.

Futures market pricing suggests a growing probability of another 25-basis-point rate increase, although economists remain divided on whether the central bank will act immediately or wait for more economic data.

Higher borrowing costs have already begun to slow housing activity and consumer spending, but inflation pressures remain a concern for policymakers.

Energy Shock Raises Inflation Risks

The surge in oil prices has become a major concern for global central banks. Since the escalation of the Middle East conflict, crude prices have climbed sharply, with some analysts warning that sustained prices above $100 per barrel could intensify inflation and dampen economic growth worldwide.

Higher fuel costs typically ripple across economies by raising transportation, manufacturing and household expenses, complicating efforts by central banks to bring inflation back under control.

Key Events to Watch This Week

Investors will be closely monitoring several developments that could drive market direction:

  • RBA interest rate decision (17 March)
  • Global central bank policy signals
  • Oil price movements amid Middle East tensions
  • Inflation and economic data from major economies
  • Ongoing geopolitical developments in the Gulf region

Outlook

With geopolitical tensions rising, oil prices surging and central bank decisions looming, financial markets are entering a period of heightened uncertainty.

For ASX investors, the combination of global volatility and domestic monetary policy risks could keep markets under pressure in the near term, with traders likely to adopt a cautious stance until clearer signals emerge from policymakers and the geopolitical landscape.