Marketbrief: Iran Conflict Deepens: Markets Hit as Oil Spikes and Risk Assets Slide

Marketbrief – 03 March 2026

1. IRAN CONFLICT – SITUATION UPDATE

1.1 US Position & Military Operations

• President Trump said the US is continuing large‑scale combat operations in Iran, adding that Iran may soon possess missiles capable of reaching the US and has refused to abandon its nuclear ambitions.
• The US has conducted over 1,250 strikes targeting IRGC command infrastructure, air defence systems, drone/missile launch positions, and military airfields.
• Washington is preparing for a “pickup” in attacks within 24 hours, according to US officials.
• CENTCOM confirmed sustained operations and noted that technical efforts may intensify to destroy Iran’s nuclear facilities.
• Trump reiterated the timeline of 4–5 weeks of conflict, though operations may last longer “whatever it takes.”
• The US is assessing retaliation for the US Embassy attack in Riyadh and the deaths of US service members, though Trump does not expect ground forces to be required, but does not exclude it fully.

1.2 Iranian Actions & Retaliation

• Iran launched new missile and drone attacks on maritime and military targets, including a drone strike on US Arifjan base in Kuwait, attacks near the US Embassy in Riyadh, and strikes on a US base in Bahrain.
• The IRGC claimed the Strait of Hormuz is closed, threatening to target any vessel attempting passage and to strike regional oil pipelines. (CENTCOM disputed that the strait is fully closed.)
• Iranian FM Araghchi said regional states should pressure the US, declaring that US bases are legitimate targets and that the war is “between Iran and America whose effects spill into the region.”

1.3 Israel’s Military Actions

• Israel launched major new attacks on Tehran government buildings, Iran’s internal security HQ, and bases. It also struck Hezbollah command centres and storage sites in Beirut.
• Hezbollah fired at Israel and targeted the Ramat David Air Base, prompting Israel to evacuate towns near Lebanon.
• Israeli officials said ground operations in Iran are under consideration and compared possible actions to prior operations in Venezuela.

1.4 Regional & Global Responses

• Qatar shot down Iranian jets and condemned Iranian attacks on its territory.
• Spain refused US requests to use airbases for operations.
• Saudi Arabia and UAE criticised Iran’s regional attacks. UAE stock market halted trading for two days; flights across Dubai were heavily disrupted after an attack on the airport.
• UK said British aircraft are part of coordinated defence; RAF intercepted an Iranian drone. UK bases are being used by the US for strikes; London prepares evacuation plans for nationals.
• Germany’s Merz expressed concern and will discuss the conflict with Trump in Washington.
• China condemned the killing of a sovereign leader and opposed the use of force; Russia expressed “deep regret.”

2. MARKETS OVERVIEW

2.1 Equities Indices

• Most major indices are selling off: Nikkei 225 -6.95%, DAX -4.28%, Euro Stoxx 50 -3.98%, CAC 40 -3.15%, Small Cap 2000 -2.59%
• Markets opened sharply lower on war headlines including the closure of the Strait of Hormuz and announcements by the USA and Israel that the conflict might extend further than the anticipated 4 week timeline.
• Energy and gold surged due to safe haven demand; Treasury yields increased due to Bond selling.
• Natural gas spiked further after QatarEnergy halted LNG production following attacks on facilities. CRUDE OIL surged due to fears of supply disruptions from the region and increased risk premiums fur tankers navigating the straight.

2.2 APAC Equities

• Asia-Pacific equities were broadly weaker due to geopolitics.
• ASX 200 fell on materials and miners; energy outperformed.
• Nikkei 225 sank below 57,000 as rising energy costs worsened inflation concerns and unemployment rose.
• Hang Seng / Shanghai Comp traded mixed before succumbing to risk-off sentiment and a PBoC liquidity drain.

2.3 Europe - Germany

The chart shows a sharp drop toward 23,730, breaking below the EMA 20 (24,895), EMA 50 (24,725) and EMA 100 (24,509), while sitting just under the EMA 200 (24,251). Key levels now include the 23,690 horizontal support, the lower side of the previous range near 23,950, and the broader consolidation area that price has re‑entered. The recent candle is large and bearish, cutting through multiple moving averages and invalidating the prior upward trendline.

Momentum indicators confirm increasing downside pressure, with MACD firmly negative and widening, RSI dropping to roughly 42, and Stochastic RSI sitting in the oversold region below 20. Together, the indicators reflect strong downward momentum, limited short‑term strength, and a market testing major structural support zones.

3. FX MARKET

3.1 USD & Majors

• DXY firmer on haven demand; analysis from JPM and ING suggests the Iran conflict challenges bearish USD views.
• EUR/USD fell from ~1.18 to the 1.16 area amid energy disruption risks.
• GBP/USD slipped, pressured by UK inflation cooling and Iran’s targeting of UK-linked military assets.
• USD/JPY held near 157 despite risk-off flows; Japanese data (unemployment, corporate profits, capex) offered mixed signals.
• Antipodeans recovered after the PBoC set its strongest fix since May 2023, but gains faded on risk sentiment.

3.2 CNY

• PBoC reference fix: 7.9088, much weaker than expected (6.8816).

4. FIXED INCOME

• USTs struggled to hold haven gains as higher oil prices revived inflation fears.
• Bunds broke below 130.00 amid surging European natural gas prices (up to +50%).
• JGBs fell in a higher-yield environment despite strong auction pricing.

5. COMMODITIES

5.1 Oil

• Crude remained elevated as the Iran conflict entered day 4 and Hormuz security deteriorated.
• Brent initially surged well above USD 80 but later eased; WTI briefly dipped below USD 70.
• IRGC threats against all ships and pipelines added further upside risk.
• OPEC+ to raise output by 206k bpd in April, with discussions of up to 441k bpd after Iran’s strike.

5.2 Metals / Gold

• Gold climbed on safe-haven demand but was capped beneath USD 5,400/oz.
• Copper saw two‑way price action but struggled above USD 6/lb in risk‑off sentiment.

6. CRYPTO

• Bitcoin retreated below USD 69,000 ahead of mild intraday recovery.

7. OTHER KEY HEADLINES

7.1 Trade & Tech

• US considering caps on Nvidia H200 shipments to 75k units per Chinese buyer. AMD’s MI325 chips to face similar limits.
• Fed Chair nominee Kevin Warsh may face resistance in shrinking the Fed balance sheet.

7.2 Asia-Pacific

• RBA’s Bullock said demand remains stronger than expected; inflation partly sector‑specific.
• Japan Unemployment rose to 2.7%;
• Australia building permits −7.2%.

7.3 Eurozone / UK

• ECB’s Philip Lane warned a prolonged Iran war could trigger a “substantial inflation spike” and sharp output decline.
• UK shop-price inflation fell to 1.1%.

-Philip Papageorgiou – Markt Analyst
--X ex Twitter: PhilipForexCom