Conflict escalated in the Middle East when the U.S. and Israel struck Iran. Prior to the attacks, the U.S. was in negotiations with Iran to stop its suspected nuclear weapons program.

The conflict has lasted for over a week with no clear sight on when it may come to an end. Both sides have struck oil tankers, bases and warships.

As tensions escalated, concerns about the oil market mounted, leaving investors to wonder about the global supply of oil. A key waterway in the shipment of crude oil to the rest of the world, the Strait of Hormuz, was largely closed, halting the flow of oil tankers. U.S. President Donald Trump said the U.S. military has ensured the safe passage of oil tankers through the waterway. Still, the backlog of tankers left many countries worried about the supply of oil.

Oil prices surged higher over the week and could rise even further. This has left investors worried about building inflationary pressures and what that could mean for central banks globally. Global bond yields moved higher in response.

Geopolitical uncertainty weighed on financial markets, and a prolonged conflict could stunt the global economic recovery.

Canadian Prime Minister Mark Carney visited Indian Prime Minister Narendra Modi in India last week to discuss trade and improve fractured ties between the two countries.

The countries signed several multi-billion-dollar trade deals with expectations of reaching a free trade deal by the end of 2026. They have set a goal to double two-way trade between the countries by 2030. The two sides agreed to a $2.6-billion deal to supply India 22 million pounds of uranium for nuclear energy from 2027 to 2035.

The partnership will include trade across energy, critical minerals, artificial intelligence and talent.

Back in Canada, data from S&P Global showed that Canadian business activity shrank for a fourth consecutive month in February. February’s decline was driven by a drop in services sector activity, which offset gains in the manufacturing sector, which benefited from stronger domestic orders.

Carney is making progress on his goals of diversifying Canada’s trade away from the U.S. On Friday, Canada-U.S. Trade Minister Dominic LeBlanc visited his counterpart in Washington to discuss the upcoming review of the Canada-United States-Mexico Agreement.

The U.S. economy lost 92,000 jobs in February, partially offsetting the 126,000 job gains in January. The result disappointed economists who were expecting 55,000 job additions.

The health care and information sectors lost significant jobs over the month. Job losses in the health care sector were elevated in large part due to a labour strike.

The U.S. unemployment rate increased to 4.4% in February from 4.3% in the previous month.

ADP reported that private businesses added 63,000 jobs in February, which was the most since July 2025.

February’s report raised doubts about the strength of the U.S. labour market after a robust January report. The U.S. Federal Reserve Board (Fed) makes its next interest rate announcement on March 18. Much of the attention lately has been on inflation after seeing signs of a stabilizing labour market. However, this report may bring the Fed’s attention back to the labour market.

A third and final estimate showed Europe’s economy expanded by 0.2% in the fourth quarter, unchanged from the third quarter. Consumer and government spending slowed.

A flash estimate showed that Europe’s inflation rate accelerated to 1.9% in February from 1.7% in the previous month. The pickup was a bit concerning as the conflict in the Middle East expected to lift energy prices, adding to inflationary pressures.

European consumers felt a bit of pressure after the holidays with retail sales falling by 0.1% in January, its first decline since August 2025.

Growth in services sector activity improved modestly in February. The sector got a boost from stronger domestic demand, while foreign orders fell.

Europe’s economy has stabilized amid global trade tensions, but growth remains tepid. After the U.S. Supreme Court’s decision on U.S. tariffs, the European Union remains uncertain about its trade deal with the U.S. and how it might impact the European economy. Now, geopolitical tensions could lift inflation, putting pressure on European consumers.