Updated 2 min read
US stock futures tumbled on Monday while oil prices surged after military strikes by the US and Israel on Iran were followed by counterattacks, sending shockwaves through global markets.
Dow Jones Industrial Average futures (YM=F) slumped 1.2%, or over 500 points. Contracts on the S&P 500 (ES=F) sank 1.1%, while those on the tech-heavy Nasdaq 100 (NQ=F) dived 1.4% as the escalating Middle East conflict spurred a retreat from risk assets.
The impact on oil prices, and in turn on inflation, is front of mind for investors already uneasy about the backdrop for stocks. The S&P 500 (^GSPC) closed February in negative territory after renewed volatility in AI and software names rattled markets.
Oil prices jumped Monday, with Brent crude futures (BZ=F) surging as much as 13% to top $82 a barrel but moderating gains to slip below $80 at last check. West Texas Intermediate futures (CL=F) traded just below $73, up around 8%. While Iran is OPEC’s fourth-largest producer, markets are also bracing for sustained disruption in the key Strait of Hormuz, where tanker traffic is at a standstill.
Shares in energy major Exxon (XOM) popped in premarket. while defense stocks including Lockheed Martin (LMT) also found buyers. But travel-linked stocks fell, with Delta Air Lines (DAL) sliding nearly 6% in the fallout.
Elsewhere in markets, gold (GC=F) jumped to top $5,400 an ounce, even as the dollar (DX-Y.NYB) rose, as JPMorgan said it expects a “risk premium” gain of up to 10% for the precious metal. Treasury yields (^TNX) moved higher as markets cut back bets on interest-rate cuts on the prospect of hotter inflation.
The next key input into those rate calculations comes Friday, with the release of the monthly jobs report. Economists expect US payrolls to have added 60,000 jobs in February, down from January’s stronger-than-expected 130,000 gain that eased recession fears.
LIVE 16 updates
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Morgan Stanley’s Wilson aays Iran unlikely to dent bullish view
From Bloomberg:
Morgan Stanley strategists see the eruption of conflict in Iran and the Middle East as unlikely to derail their bullish view on US stocks, barring a sharp and sustained surge in oil prices.
Geopolitical risk events historically haven’t resulted in sustained volatility for US equities, the team led by Mike Wilson wrote in a note, citing the average performance of the S&P 500 (^GSPC) index in months following such episodes.
In terms of the latest Iran conflict, the bear case stems from a sharp and persistent rise in oil prices, which could compromise what the strategists see as a strengthening business cycle, the strategists said.
“Unless oil prices spike in a historically significant manner and remain elevated, recent events are unlikely to change our bullish view on US equities over the next 6-12 months,” they wrote.
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Premarket trending tickers: Norwegian Cruise Line, Berkshire, and American Airlines
Norwegian Cruise Line Holdings Ltd. (NCLH) stock fell 7% before the bell on Monday. The cruise line released its fourth quarter earnings, and despite beating analyst estimates, the group’s stock fell as investors worried about the rise of oil prices driving up fuel costs. Royal Caribbean (RCL) shares also fell 5% during premarket hours today.
Berkshire Hathaway’s (BRK-B) stock fell 1% during premarket hours following the release of its fourth quarter earnings on Saturday. Berkshire’s operating profit after taxes fell 30% from a year ago.
American Airlines’ (AAL) stock fell 5% before the bell on Monday, as the rise in oil prices caused worry among investors that fuel costs would increase.
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Gold surges above $5,400 as demand for safe-haven asset jumps amid Iran conflict
Gold futures (GC=F) rose on Monday, trading above $5,400 per ounce as the ongoing conflict in the Middle East caused investors to move toward safe-haven assets.
Yahoo Finance’s Ines Ferré reports:
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Treasurys retreat as inflation concern eclipses haven buying
The 10-year Treasury yield is rising alongside those for US bonds more broadly, even as the spiraling US-Iran conflict sparks a risk-off mood in markets.
From Bloomberg:
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Dollar rallies as oil’s surge curbs bets on Fed rate cuts
The dollar (DX=F) rose against other currencies as high oil prices led investors to think the Federal Reserve won’t cut rates soon.
Bloomberg News reports:
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Tesla gains market share in France, Norway in February
Tesla (TSLA) gained market share again in France and Norway in February, according to official data, in a sign of stabilization in Europe after two years of declining sales. Tesla stock fell 2% before the bell on Monday.
Reuters reports:
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Defense stocks jump, airlines slide as Iran attack jolts markets
Airline, hotel, and defense stocks all rose Monday as investors began to react to the Iran conflict. Lockheed Martin (LMT) shares rose 7% before the bell on Monday, alongside RTX (RTX). BAE Systems’ (BA.L) London shares were up 5%.
Energy companies also saw their stocks jump, with New Fortress Energy (NFE) shares rising 15% in premarket trading. oil major Equinor ASA (EQNR) rose 4%.
Bloomberg News reports:
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Gold prices around prior Middle East wars
Gold (GC=F) prices catching a strong bid this morning to over $5,400 an ounce.
Helpful chart from JPMorgan showing how gold prices have reacted around prior Middle East conflicts:
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Early Yahoo Finance trending tickers following US attacks on Iran
No surprise here, some of the most visited ticker pages on Yahoo Finance this morning include Exxon Mobil (XOM), Lockheed Martin (LMT), Chevron (CVX) and Occidental Petroleum (OXY).
You can check out the full list of names here.
Some helpful charts from EvercoreISI on the exposures for the oil majors.
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Goldman Sachs on the markets amid Operation Epic Fury
How Goldman is thinking about the markets in the wake of the US attacks against Iran:
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Trump pushes for Iran leadership change as Tehran stays defiant
President Trump said on Sunday that the bombing against Iran will continue for several weeks and called for Tehran’s leaders to surrender. But Iran’s security chief said it has no intention of negotiating with the US.
Blasts continued across Bahrain, Kuwait, the United Arab Emirates, and Qatar, as the Gulf states intercepted missiles launched by Iran in retaliation for the US-Israeli strikes, showing the war is spreading beyond Iran’s borders. The conflict has entered its third day since US-Israeli forces began airstrikes against Iran over the weekend.
Trump is calling on Iran’s leaders to hand power to the nation’s people, and The Atlantic said Trump has agreed to speak with Iran’s new leadership.
Bloomberg News reports:
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Bitcoin falls beneath $67,000 in fallout from Middle East attacks
Yahoo Finance’s Ines Ferré reports:
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Gold rises as Middle East instability pushes investors to safe-haven assets
Bloomberg reports:
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Oil prices leap higher as attacks on Iran shake global markets
Yahoo Finance’s Jake Conley reports:
