A volatile February ended with markets caught between competing forces: fading tariff uncertainty, a technology sector in flux, and a sharp geopolitical escalation in the Middle East that has injected fresh risk into the outlook.

Tariffs: From Crisis to Confusion

Markets wobbled on the renewed uncertainty, but the response was ultimately muted post The US Supreme Court's 6-3 decision to strike down the Trump administration's reciprocal tariffs. Many China-specific and sector-level tariffs on steel and autos remain in place under separate legislation, and the administration has reimposed a 10 per cent baseline tariff — with reports that 15 per cent is still on the table. The UK, which had believed it had secured an exemption, found itself swept back in. For Australia, the 10 per cent rate holds for now. Tariff worries appear largely priced in, though the 150-day window before the baseline tariff is reviewed leaves a cloud over trade-sensitive sectors.

Technology: Whiplash and Rotation

Technology stocks endured another bruising stretch. The sector has been under sustained pressure since Anthropic's AI models launched late last year, with software companies hit hardest — the iShares Expanded Tech Software ETF is down over 27 per cent in 2026. IBM nosedived on reports that Anthropic was developing protocols to disintermediate legacy tech providers, dragging the ASX Technology sector deeper into the red mid-week. A partial reprieve came when the AI firm announced partnerships with a range of at-risk companies, sparking a 2 per cent rally in local tech names. In the US, Nvidia delivered blowout earnings but failed to reignite the mega-cap trade, with much of the rebound concentrated in heavily sold software names. Fed Governor Chris Waller added to the narrative, noting that CEOs are telling him significant job cuts from AI are coming.

Australian Equities: Earnings Season Bites

On the ASX, reporting season delivered its usual drama. Woolworths surged on a strong turnaround, Ramsay Health Care rallied on robust hospital earnings and moves to shed troubled French assets, and Reece impressed with cost discipline despite tough conditions. On the other side, Perenti and Worley tanked, and Lend Lease fell on further impairments. Resources maintained momentum, BHP and Woodside both hit 52-week highs, with Woodside delivering a bigger-than-expected dividend. Alternative asset managers remain under pressure after Blue Owl restricted redemptions from a private credit fund, raising broader questions about liquidity in the sector. Inflation data showed price pressures remain sticky, and markets now expect the RBA to hike again, likely in May.

Middle East: A New Front for Markets

The US and Israel struck Iran late last week, reportedly killing Supreme Leader Khamenei and disrupting shipping through the Strait of Hormuz. The range of outcomes is wide. At one end, rapid de-escalation via Omani mediation could see oil spike to $85–95 before retreating. At the other, full regional war and Hormuz closure could remove roughly 20 per cent of global oil supply, sending Brent above $120 and raising the spectre of global recession. The most probable scenario, an extended air campaign degrading Iran's military over one to three months, points to oil in the $90–110 range and a 5–10 per cent drawdown in US equities. For Australia, the transmission channels are direct: petrol prices, LNG export revenues, Chinese growth, equity risk appetite, and gold as a hedge. Energy stocks are squarely in focus this week.

Outlook

The week ahead will be shaped by how the Middle East situation evolves. Watch for Trump's rhetoric, Iran's retaliatory posture, OPEC's response, and the Monday oil price open. Domestically, the interplay between sticky inflation, a potential RBA hike, and earnings momentum in resources will continue to set the tone. Markets are resilient, but the list of risks demanding attention is growing.