Oil surges, equities tumble as markets open following Iran attacks

Wall Street Faces Turbulence After Middle East Strikes

U.S. stock futures plunged on Sunday evening, March 1, as global markets responded to recent attacks in the Middle East that resulted in the death of Iran’s Supreme Leader Ayatollah Ali Khamenei. The strikes disrupted international energy routes and heightened concerns about a potential escalation of conflict in the region.

While geopolitical tensions often unsettle financial markets, their effects are usually limited. However, some experts believe the latest clashes involving the U.S., Israel, and Iran could have more significant consequences.

Analysts from TD Securities noted in a March 1 report that this weekend’s events are likely to trigger a broader market reaction than other recent geopolitical incidents. They pointed out that immediate disruptions to energy supplies and the risk of the conflict spreading are weighing on investor sentiment.

Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors, explained in comments to USA TODAY that stocks were already under pressure due to concerns about artificial intelligence-driven changes and instability in private credit markets.

Market Reactions to Watch

Hatfield anticipates that investors will shift away from equities and move into bonds. This trend had already started before the strikes, with the S&P 500 dropping 0.4% on Friday and the yield on the 10-year U.S. Treasury note falling below 4%. As bond prices rise, yields decrease, and vice versa.

Traders on the New York Stock Exchange floor are bracing for increased volatility following the weekend’s military actions involving the U.S., Israel, and Iran.

By Sunday, major U.S. stock index futures had each declined by roughly 1%.

According to Goldman Sachs analysts, global investors may also seek safety in the U.S. dollar, potentially reversing a recent period of dollar weakness. Despite U.S. stocks underperforming global peers so far this year, the S&P 500 has remained relatively flat, while the Vanguard FTSE All-World ex-US Index Fund ETF has climbed over 11%. This positions the U.S. to better weather a sustained rise in oil prices.

Experts are also preparing for oil prices to surge past $90 per barrel, with Brent crude—the international standard—trading near $80 per barrel as of 6 p.m. ET on March 1.

Gold is expected to benefit significantly from the turmoil. TD Securities analysts predict the precious metal could jump by as much as $200 per ounce at the market open, with silver likely to follow suit.