As of Sunday evening, March 1, 2026 (approx. 5:00 pm Pacific)
Over the weekend, open hostilities escalated between the United States and Israel on one side and Iran on the other. Our thoughts are with everyone affected. From a financial perspective, wars often trigger an immediate rise in uncertainty—and markets tend to reprice risk quickly.
Because U.S. markets have been closed during the first days of the conflict, tomorrow’s open may deliver the first full “price discovery” for U.S. stocks. The region’s central geography also raises the risk of broader spillover—potentially drawing in additional Middle Eastern countries and European powers—which can amplify uncertainty. We should be prepared for a sharp, headline-driven move. The encouraging counterpoint is that markets can rebound rapidly when investors begin to anticipate de-escalation.
Early market indicators (snapshot)
The figures below are early indications from futures and overseas markets. They are dynamic and may change materially by the U.S. open.
- S&P 500 futures: ≈ -1.1% (6,813.75)
- EuroStoxx 50 (overnight / indicative): ≈ -1.2% (6,044.00)
- Japan (Nikkei 225): ≈ -2.2% (57,557.90)
- Oil (WTI futures): ≈ +7.0% ($71.69)
- Oil (Brent futures): ≈ +8.0% ($78.33)
- Gold (futures): ≈ +1.6% ($5,364.04)
Source: Markets Insider/Business Insider premarket quotes (accessed March 1, 2026). (Note: indicative prices may differ from exchange prices.)
Why stocks often fall when wars begin
Markets price the unknowns—duration, escalation risk, policy response, and economic spillovers. That usually raises volatility and can compress stock valuations in the short run.
- Uncertainty → higher risk premiums and higher volatility.
- Energy and shipping disruptions can pressure corporate margins and consumer confidence.
- The first reaction is often “risk-off”: selling equities and buying perceived safe havens.
Bonds, oil, and inflation: the key channels
In many geopolitical shocks, investors rotate toward liquidity and credit quality—often benefiting U.S. Treasuries and other high‑quality bonds in a “flight to safety.” At the same time, energy is an input to nearly everything; a sustained oil spike can be inflationary and may influence interest rates over time.
A major focal point is the Strait of Hormuz. In 2024, oil flows through the strait averaged about 20 million barrels per day—roughly 20% of global petroleum liquids consumption. About 20% of global liquefied natural gas (LNG) trade also transited the strait in 2024.
One early response from energy producers: eight OPEC+ countries (including Saudi Arabia and Russia) announced plans to increase output by 206,000 barrels per day starting in April. Whether that offsets the market’s concerns depends largely on shipping access and the duration of the conflict.
History: the 1990–1991 Gulf War market pattern (a reference point)
No two conflicts are identical, but the last major Middle East oil shock is a useful reminder of how quickly markets can move.
- Aug 1–2, 1990: Iraq invades Kuwait — Stocks fell sharply and oil rose quickly (shock phase).
- Oct 11, 1990 — S&P 500 trough near -20% from peak as oil peaked above $40 (peak uncertainty).
- Mid‑Jan 1991: Desert Storm begins — Oil fell back toward ~$20 soon after; stocks were already off the lows.
- Feb 24, 1991: ground campaign begins — Stocks had largely recovered; oil had fallen sharply.
Oil also moved dramatically in that episode: the average price rose from roughly $17 per barrel in June 1990 to about $36 in October, the spot price reached about $40 in mid‑October, and it fell back toward ~$20 soon after Desert Storm began in mid‑January 1991.
The lesson: markets can bottom and begin recovering before a conflict is “over,” which is why trying to sell “until things look better” can be particularly difficult to execute well.
What we suggest clients do (and not do) now
This is a time to lean on process, not predictions:
- Stay aligned with your long‑term plan. Volatility is the “price of admission” for long‑term stock returns.
- Avoid all‑or‑nothing market timing. Some of the best market days often occur near the worst days.
- Keep near‑term spending needs in low‑volatility assets. That reduces the chance you’re forced to sell stocks at depressed prices.
- Rebalance systematically if appropriate. Volatility can create opportunities to rebalance back to targets.
We are monitoring conditions closely and will communicate as markets digest developments. If your circumstances have changed or you feel anxious, please reach out.
Disclosures: This commentary is for informational and educational purposes only and is not individualized investment advice, nor a recommendation to buy or sell any security. Market and economic conditions can change rapidly. Past performance is not a guarantee of future results. All investing involves risk, including possible loss of principal.