Last Friday, equity indices closed mixed. The S&P 500 rose by 0.11%, while the Nasdaq 100 fell by 0.35%. The Dow Jones Industrial Average declined by 0.56%.

Today, emerging-market indices plunged as escalation in the Middle East after the breakdown of peace talks dented risk appetite. Investors who were considering allocating to risk assets as recently as yesterday are now rapidly withdrawing capital, fearing further deterioration of the conflict. Oil prices, by contrast, are climbing steadily, which does not, however, offset the broader losses in equity markets.

The MSCI Emerging Markets index fell by 1.2% in Asian trading under pressure from technology names, including Samsung Electronics Co. and Tencent Holdings Ltd. Regional currencies mostly weakened against the dollar: the Indian rupee and the South African rand each dropped by more than 0.7%. The Hungarian forint outperformed after a convincing victory by the pro-European opposition. Global sovereign bonds also fell on the failed talks, amplifying inflation concerns.

As noted above, the sharp oil spike — back above $100/bbl after President Donald Trump ordered a blockade of the Strait of Hormuz — raises inflationary fears for oil-importing countries, especially in Asia. The escalation has halted the recovery in emerging-market assets after last week's ceasefire hopes had lifted sentiment.

Regarding inflation, the latest US data for March came in slightly below economists' forecasts, showing a 0.9% monthly rise. Core prices were even softer than expected, remaining at levels relatively acceptable to the Federal Reserve. The year-on-year rate ticked up from 2.5% to 2.6% versus a 2.7% consensus. These figures give the Fed food for thought. On the one hand, they confirm that prior efforts to rein in prices are gradually taking effect. On the other hand, inflation is still above the Fed's 2% target, meaning the path to full price stability is not yet clear. Economists will continue to scrutinize each new release for signs of when the regulator might be ready to ease policy.

As for the S&P 500 technical picture, the main task for buyers today is to overcome the nearest resistance level of $6,784. That would help the index gain upside momentum and could also pave the way for a thrust to $6,801. Equally a priority for bulls will be control above $6,819, which would strengthen buyers' positions. In the event of a downside move amid reduced risk appetite, buyers must assert themselves around $6,769. A break below that level would quickly push the instrument back to $6,756 and open the way to $6,743.