Markets rebound as risks linger

Equities gain, but concerns over inflation and growth remain

Published on Mar. 5, 2026

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After a difficult start to the week, European and US markets rebounded on Wednesday, with the Dax, Euro Stoxx 50, FTSE 100, and CAC 40 all posting gains. The rebound was partly driven by a technical bounce, as well as reports that Iranian intelligence agents had approached the CIA about potential negotiations to end the conflict. However, the outlook remains clouded, with concerns over rising energy prices, the potential for stagflation, and the impact on central bank policy.

Why it matters

The volatility in the markets reflects the ongoing uncertainty and risks surrounding the conflict in the Middle East, which is disrupting global energy supplies and fueling inflationary pressures. This could have significant implications for the global economy, central bank policy, and the performance of equity markets going forward.

The details

The rebound in equities on Wednesday was driven by a few factors, including a technical bounce after the steep losses earlier in the week, as well as reports that Iranian intelligence agents had approached the CIA about potential negotiations to end the conflict. However, the calm proved short-lived, as oil and gas prices surged again on Thursday, reflecting ongoing supply tensions. The outlook has darkened, with concerns over the impact of higher energy prices on inflation and growth, as well as the potential implications for central bank policy. The Federal Reserve and European Central Bank may be forced to rethink their policy plans, potentially leading to further market volatility.

  • On Monday and Tuesday, European indices lost almost all of their gains accumulated since the start of the year.
  • On Wednesday, the Dax and Euro Stoxx 50 gained 1.7%, while the FTSE 100 and CAC 40 rose by 0.8%.
  • On Thursday, oil and gas prices surged again as signals of supply tensions multiplied.

The players

Christine Lagarde

The President of the European Central Bank, who will be closely watched for any comments on the central bank's policy plans.

Donald Trump

The former US President, who has indicated that the time for negotiations with Iran has passed.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

The takeaway

The rebound in markets on Wednesday provided a temporary respite, but the underlying risks and concerns remain. The conflict in the Middle East, rising energy prices, and the potential for stagflation continue to cloud the outlook, raising questions about the ability of central banks to navigate the challenges ahead and the prospects for further gains in equity markets.