Energy And Commodities Surge
Brent crude briefly neared $120 on Thursday, and both WTI and Brent were up more than 40% since the war began in late February. Venture Global and Cheniere Energy had double-digit weekly gains, and European gas prices stayed near four-year highs. The Fed held rates at 3.50%–3.75% and the dot plot pointed to one 25-basis-point cut in 2026. FedWatch put June hold odds at about 89% (from 63%), with roughly 12% pricing in a hike. The Dollar Index rose above 100.50 before trading near 99.60, while gold fell below $5,000 and towards $4,650, and silver dropped over 8% in one session. Newmont fell about 7.5% and Alcoa more than 8%, while FedEx jumped about 9% after reporting $5.25 EPS on $24 billion revenue and lifting guidance to $19.30–$20.10. We remember the sharp Q1 2025 market downturn, which saw the Dow suffer its worst week since 2022 amid geopolitical conflict and a hawkish pivot from the Federal Reserve. That period serves as a crucial reminder of how quickly sentiment can shift based on inflation fears and global instability. The market is now showing similar signs of fatigue after a strong start to the year.Market Strategy And Hedging
As of March 2026, we are seeing familiar echoes from that period, as the February Consumer Price Index (CPI) came in hotter than expected at 3.4%, reigniting inflation concerns. Geopolitical tensions are also simmering again, this time with naval posturing in the South China Sea, causing jitters in the supply chain outlook. The Dow has pulled back nearly 800 points this week from its recent highs above 49,500, showing that investor confidence is fragile. Given this backdrop of uncertainty and the memory of last year’s rapid decline, buying protective puts on broad market indices like the SPY and QQQ is a prudent strategy. The CBOE Volatility Index (VIX) has already crept up from 13 to over 18 in the past two weeks, a notable increase in expected market turbulence. Purchasing VIX call options could provide an effective hedge if we see a repeat of last year’s volatility spike. The conflict in 2025 drove Brent crude toward $120 a barrel, making energy stocks one of the few places to hide. With Brent now pushing $95 a barrel amid the new tensions and OPEC+ holding firm on production cuts, we believe call options on energy sector ETFs like XLE are attractive. This allows for capitalizing on elevated oil prices, which historically outperform during periods of geopolitical stress. The Fed’s hawkish hold last year was a major catalyst for a stronger dollar and a brutal sell-off in precious metals. Today, the CME FedWatch tool shows that market expectations for a June rate cut have dropped from over 70% just a month ago to below 40%, as persistent inflation forces the Fed’s hand. This repricing could trigger another rally in the US Dollar, creating opportunities to buy puts on precious metals ETFs like GLD, which are highly sensitive to rising yields and dollar strength. Even in a falling market, individual company performance can create openings, as FedEx demonstrated with its earnings beat in 2025. With earnings season approaching, we should prepare to trade the volatility around specific reports for companies with solid fundamentals. Using options strategies like straddles on stocks with high implied volatility can be profitable regardless of which direction the stock moves post-announcement. Create your live VT Markets account and start trading now.
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