The Major Markets were awash in red last week as further escalation of the military actions in Iran weighed heavily on Investor sentiment. For the Major Markets, the greatest losses were in the Emerging Markets space, which lost nearly 7 percent last week.  Presently, the Emerging Markets Index has the greatest weighting towards eastern Asia with large concentrations in China, Taiwan and Korea. That said, the conflict in the Middle-east has had a larger impact to these countries due to the effect of the trade alone through that region.

For the domestic market, investors took a more risk off sentiment as the Dow dropped 3%, the S&P 500 fell 2%, and the Nasdaq lost 1.2%. Across the style boxes, Mid-cap and small cap names were hit even harder, with Mid-cap growth down nearly 5%.

As already mentioned, the biggest driver last week was geopolitics. The conflict in the Middle East raised concerns about global oil and natural gas supply after tanker traffic through the Strait of Hormuz slowed dramatically and refineries were either bombed or taken offline . As a result, crude oil surged with oil reaching as high as $111 a barrel over the weekend.

These higher energy prices created downstream concerns about rising transportation costs, corporate margins, and the potential for renewed inflation pressure. As a result, most sectors declined, with energy stocks being the lone exception to close higher.

With volatility rising sharply, investors will be watching inflation data and oil prices closely in the weeks ahead.