Dollar Surges as Traders Brace for War Impact

Stocks and US Futures Decline, Oil Jumps on Iran: Markets Wrap

Matthew Griffin, Ruth Carson and Matthew Burgess

Mon, March 2, 2026 at 2:00 AM GMT+1 5 min read

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(Bloomberg) -- Stocks fell and crude oil surged as an escalation in the Middle East conflict unsettled global markets, prompting investors to trim risk exposure and seek haven assets. The dollar strengthened.

Asian shares fell 1.1%, with equity-index futures for the US and Europe also tumbling as tensions escalated following the US-Israeli war against Iran. Brent surged as much as 13% — before paring gains — as the conflict plunged the global crude market into turmoil, with the effective closure of the Strait of Hormuz.

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As investors shunned risk, haven assets got a bid. Treasuries fluctuated with the yield on the 10-year falling to the lowest level since April and the yield on the 5-year declining to the lowest since October 2024. Gold rose 1.4% to trade close to $5,350 an ounce. The dollar strengthened against almost all its Group-of-10 peers.

“History tells us that geopolitical shocks tend to produce sharp initial moves in oil and safe havens that often fade relatively quickly if the conflict proves contained,” said Josh Gilbert, market analyst at eToro Ltd. “Until there are clear signals of de-escalation, investors should expect elevated volatility across oil, gold, currencies, and equities throughout the week ahead.”

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Shaken by fresh anxieties over artificial intelligence and potential cracks in credit, all while trading at historically high valuations, stock markets must now contend with the spiraling military action in Iran and the broader region that threatens to destabilize global shipping and limit travel. The impact on oil and inflation is of paramount concern in markets that last month saw US stocks post their worst drop since April.

Bloomberg Economics said that if the Strait of Hormuz is closed, then it could trigger a spike as high as $108. About one-fifth of global oil flows pass through the waterway, making it a critical energy choke point.

Read: Iran Strikes Lift Asian Energy, Defense Stocks; Airlines Drop

Digital signals indicate that oil-tanker traffic through Hormuz has nearly halted, and three ships were attacked near the mouth of the Persian Gulf, heightening fears that supplies could tighten. Iran has said it doesn’t intend to shut the passage.

“Markets are pricing a limited conflict, with broader investment implications still manageable unless escalation proves prolonged,” Adam Hetts, Global Head of Multi-Asset at Janus Henderson, wrote in a note. “As always, diversification and a long‑term perspective matter most when uncertainty peaks.”

Strategists at Barclays Plc warned against quickly buying any dip. Investors have grown accustomed to geopolitical flare-ups that fade fast, but this episode risks lasting longer, wrote Ajay Rajadhyaksha, the firm’s global chairman of research, citing the potential for US casualties, strikes on Iranian leadership and disruption to Hormuz traffic.

“The risk-reward doesn’t seem compelling,” he said. “If equities pull back enough (say over 10% in the S&P 500), there is likely to come a time to buy. But not yet.”

Geopolitical risks are adding a new layer of concern for markets after the disruptive potential of AI roiled stocks across sectors for weeks in the US, in what’s become known as the “AI scare trade.” Issues related to private credit — a key funding source for technology companies — have also weighed. Even before Monday’s jump in oil prices, data on Friday showed a hotter-than-estimated reading on US producer prices.

[WATCH: Bloomberg Intelligence’s Mike McGlone explains what the US and Israeli strikes on Iran mean for oil and commodities prices.Source: Bloomberg]

WATCH: Bloomberg Intelligence’s Mike McGlone explains what the US and Israeli strikes on Iran mean for oil and commodities prices.Source: Bloomberg

Any long-lasting oil price spike would also muddy the case for Treasuries. While a flight to safety in markets would cause yields to fall, higher energy prices that feed through the economy and stoke inflation drive them higher.

“Even without a formal closure of the Strait of Hormuz, the reality is that vessels rerouting and sharply higher insurance premiums effectively tighten supply conditions,” said Dilin Wu, a strategist at Pepperstone. “That alone embeds a fresh inflationary impulse into the global economy.”

The possibility of prolonged turmoil in the Middle East and the ripple effects of higher oil prices are giving money managers fresh reasons to sell equities and shift into safety. Rich valuations across global equities and credit also make it easier for investors to trim risk.

“This is all coming at a fragile time as investors are becoming more cautious,” said Dec Mullarkey, managing director at SLC Management. “US equity markets are already very sensitive to threats of technology disruption and emerging credit stress, so the prospects of higher commodity prices could force a selloff as investors rein in risk.”

Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.9% as of 9:57 a.m. Tokyo time

Hang Seng futures fell 0.5%

Nikkei 225 futures (OSE) fell 2.1%

Japan’s Topix fell 1.9%

Australia’s S&P/ASX 200 fell 0.5%

Euro Stoxx 50 futures fell 1.6%

Currencies

The Bloomberg Dollar Spot Index rose 0.3%

The euro fell 0.3% to $1.1772

The Japanese yen fell 0.3% to 156.46 per dollar

The offshore yuan fell 0.2% to 6.8771 per dollar

The Australian dollar fell 0.5% to $0.7081

Cryptocurrencies

Bitcoin rose 1.3% to $66,523.21

Ether rose 1.7% to $1,962.3

Bonds

The yield on 10-year Treasuries advanced one basis point to 3.95%

Japan’s 10-year yield declined 2.5 basis points to 2.085%

Australia’s 10-year yield declined four basis points to 4.61%

Commodities

West Texas Intermediate crude rose 7.3% to $71.94 a barrel

Spot gold rose 1.4% to $5,352.31 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Carmeli Argana, Natalia Kniazhevich, Sid Verma and Muyao Shen.

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