Iran war drives sentiment to three-month low as markets slide
US consumer sentiment hit a three-month low in March as the Iran war stoked inflation fears and pushed energy prices sharply higher, according to multiple surveys published Friday. The breadth of the decline is notable: even higher-income Americans, who tend to be insulated from fuel-cost shocks, are turning pessimistic.
Brent crude, the global benchmark, rose to $110 a barrel, amplifying concerns that sustained elevated energy costs will feed into broader price pressures. Analysts at Apollo have characterised the dynamic as "sentiment destruction" rather than demand destruction, suggesting that spending has not yet collapsed but confidence is eroding fast.
Equity markets reflected the anxiety. The Dow Jones Industrial Average dropped more than 400 points in early Friday trading, briefly pushing the index into correction territory — defined as a decline of at least 10 per cent from a recent peak. The selloff follows weeks of volatility linked to the conflict and its potential inflationary consequences.
The deterioration in consumer expectations aligns with economic projections that the war will sustain upward pressure on inflation, complicating the Federal Reserve's path on interest rates. Recession fears have entered the mainstream conversation, with USA Today and CBS News both citing the conflict as the primary driver of falling confidence.
Whether sentiment destruction translates into demand destruction will be the critical question for markets in the weeks ahead. For now, the data presents a coherent and troubling picture: rising prices, falling confidence, and an equity market that is beginning to price in a more adverse scenario.
