Gulf conflict hits markets as oil climbs again

Global equities delivered a mixed performance as rising oil prices and escalating tensions in the Middle East unsettled financial markets. Crude climbed to around 88 dollars per barrel following disruptions near the Strait of Hormuz, raising concerns about supply and the inflationary impact of higher energy costs. In the United States, equities ended the session mixed. The Nasdaq Composite edged marginally higher, supported by strength in technology shares, while the S&P 500 slipped slightly and the Dow Jones Industrial Average fell more notably as bond yields climbed. Higher Treasury yields and a stronger US dollar weighed on risk sentiment, while sector performance was uneven with energy and technology outperforming and defensive sectors such as consumer staples and real estate lagging.

Earlier in the global trading day, Asian equities advanced, although European markets closed lower, reflecting growing caution among investors as geopolitical risks intensify. Markets also assessed the decision by the International Energy Agency to release a record 400 million barrels from strategic reserves in an effort to stabilise supply following disruptions linked to Iran and regional conflict. Meanwhile, US inflation data for February broadly matched expectations, with consumer prices rising 0.3 percent month on month and core inflation increasing 0.2 percent. While underlying inflation trends showed some improvement, the surge in oil prices has shifted the near term outlook, as higher energy costs are expected to push headline inflation higher in the coming months and may prompt the Federal Reserve to keep interest rates on hold for longer.

Latest market and economic update

• Asian equities declined on Thursday as investors locked in recent gains and adopted a more cautious stance. Japan’s Nikkei 225 fell about 2 percent, with the broader TOPIX also weaker. South Korea’s KOSPI, Hong Kong’s Hang Seng Index and Australia’s S&P/ASX 200 all moved lower, while mainland Chinese markets posted modest declines.

• US equity futures moved lower overnight as oil prices surged amid escalating tensions near the Strait of Hormuz. Futures on the S&P 500, Nasdaq 100 and Dow Jones Industrial Average fell around one percent as rising energy prices and geopolitical risks weighed on sentiment. Investors also awaited upcoming US inflation and labour market data.

• European equities fell sharply as energy price concerns weighed on sentiment. The EURO STOXX 50 dropped 1 percent and the STOXX Europe 600 fell 0.8 percent. Banking shares, including Banco Santander, UniCredit and Deutsche Bank, led losses, while SAP, Prosus and Rheinmetall also declined amid broader market caution and geopolitical uncertainties.

• The US dollar remained near its strongest levels this year as rising oil prices and geopolitical tensions stoked inflation concerns, prompting expectations of tighter global monetary policy. The euro fell 0.1 percent to $1.1549, approaching its lowest since November, while Japan’s yen and other major currencies also weakened against the greenback.

• Oil prices surged in Asian trading as escalating conflict involving Iran, the United States and Israel heightened fears of supply disruptions. Brent crude oil rose above 100 dollars per barrel while West Texas Intermediate climbed sharply after tanker attacks and shipping disruptions near the Strait of Hormuz raised concerns over global energy supplies.

• G7 leaders, led by Emmanuel Macron, agreed the Middle East tensions from the U.S.-Israeli-Iran conflict do not justify lifting sanctions on Russia. Following the discussions, the International Energy Agency announced a historic release of 400 million barrels of oil, with France receiving 14.5 million barrels to ease market pressures.

• Gulf economies, including Saudi Arabia, the UAE, Qatar, and Kuwait, are reassessing sovereign wealth fund strategies to offset losses from the U.S.-Israeli-Iran conflict. While hydrocarbon sectors may recover, non-oil industries face lasting damage, prompting potential adjustments in investment, sponsorships, and deployment of the region’s $5 trillion in sovereign wealth assets.

• U.S. inflation remained moderate in February, with consumer prices rising 2.4% annually and 0.3% monthly, while core inflation held at 2.5%. However, the data predates the U.S.-Israeli strikes on Iran, which disrupted oil flows through the Strait of Hormuz and pushed energy prices higher, raising concerns inflation could accelerate and complicate Federal Reserve policy decisions.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

• SoftBank Group shares fell 4 percent to 3,727 yen after its digital payments affiliate PayPay priced its US initial public offering below expectations at $16 per American depositary share, raising around $880 million. The ADSs will begin trading on Nasdaq later today under the ticker “PAYP,” amid broader market volatility and geopolitical tensions. 

• Nissan Motor, Uber Technologies and British startup Wayve announced a partnership to develop robotaxis in Tokyo, targeting a pilot programme by late 2026. Nissan Leafs fitted with Wayve’s autonomous technology will be offered via Uber, initially with trained safety drivers, while the companies consider expanding services to other international markets.

• Nebius Group N.V. and NVIDIA Corporation have formed a $2bn strategic partnership to develop hyperscale AI cloud infrastructure. Nebius will deploy over 5GW capacity by 2030, integrating NVIDIA’s Rubin, Vera, and BlueField platforms. Collaboration spans AI factory design, inference, infrastructure, and fleet optimisation, accelerating Nebius’s AI cloud buildout globally.

• Several LNG buyers, including Shell plc and TotalEnergies, have declared force majeure following QatarEnergy’s production halt at its 77 mtpa facility. While March deliveries remain unaffected, disruptions are expected from April. Both firms have long-term North Field expansion partnerships, with Shell taking 6.8 mtpa and TotalEnergies 5.2 mtpa.

• Citigroup Inc. and Standard Chartered have evacuated Dubai offices, instructing staff to work from home after Iran threatened Gulf banking interests linked to the U.S. and Israel. HSBC Holdings plc also closed Qatar branches. These actions highlight rising regional tensions, dent Dubai’s safe-haven appeal, and raise concerns over business continuity, capital flight, and potential layoffs.

• Elon Musk announced a joint project between Tesla and xAI, called Macrohard or Digital Optimus, capable of emulating software companies’ functions. It combines xAI’s Grok language model with a Tesla AI agent. Running on Tesla’s AI4 chip and Nvidia servers, the system aims to be cost-competitive. SpaceX recently acquired xAI ahead of a potential IPO.

• Taiwan Semiconductor Manufacturing Co reported February revenue of NT$317.66 billion, up 22.2% year-on-year, driven by strong demand for advanced AI and computing chips. Revenue for the first two months of 2026 reached NT$718.91 billion, a 29.9% increase, reflecting robust demand from technology companies building AI infrastructure and next-generation systems.

• An Iranian-linked hacking group, Handala, claimed responsibility for a cyberattack on US medical device firm Stryker, wiping remote Windows devices and disrupting systems. The SEC filing confirmed outages, though no ransomware was detected. Experts link the attack to Iranian retaliation amid US-Israeli strikes, signalling escalating state-sponsored cyber threats.

• A key credit risk indicator for Oracle Corp. improved sharply on Wednesday after its quarterly results eased investor worries over AI-related capital spending. Five-year credit default swap protection costs fell to a one-month low of 1.52 percentage points, according to ICE Data Services, signalling stronger investor confidence in the company’s credit quality and outlook ahead overall.

• Morgan Stanley limited redemptions to 5 percent at its North Haven Private Income Fund, fulfilling only 45.8 percent of requests amid heightened investor withdrawals from private credit markets. Concerns over software company loans and broader market volatility prompted the move, following similar actions by JP Morgan, BlackRock and Blackstone.

• Goldman Sachs raised its Q4 2026 Brent and WTI crude forecasts to $71 and $67 per barrel, citing prolonged Strait of Hormuz disruptions from the US-Israeli conflict with Iran. The bank anticipates 21 days of low flows, gradual recovery, and prices potentially surpassing 2008 peaks, even after planned strategic reserve releases are factored in.

• Barclays warns European equities could decline if oil remains near $100/barrel. Markets currently discount a 25% chance of a major supply disruption, but prolonged high prices may push STOXX 600 down to 550, weaken EPS growth to low single digits, and trigger hawkish central bank action. Energy, utilities, and healthcare outperform, while financials and other cyclical sectors lag.

• Goldman Sachs Group, Inc. forecasts stronger earnings for Samsung Electronics and SK Hynix as rising DRAM and NAND prices, combined with AI-driven memory demand, tighten supply. SK Hynix could achieve high-70% DRAM margins and 80% ROE, while Samsung’s operating profit may quintuple in 2026, with both stocks remaining attractively valued despite growth expectations.

• Wolfe Research raised its price target on Eli Lilly to $1,325, citing stronger expectations for its oral obesity drug orforglipron. The pill could expand the market by removing injection barriers, with peak sales estimated at $44bn. Despite recent share weakness, Lilly is expected to dominate the obesity market and grow revenue over 15% annually ahead.

• JPMorgan Chase & Co. upgraded Oracle Corp. to Overweight with a $210 price target, citing a 55% sell-off that improved risk-reward. Strong Q3 results showed 22% revenue growth, cloud and AI surges, and $7.38bn operating income. Cloud migration, multi-cloud adoption, and database innovation support continued expansion despite margin pressures.

• Barclays upgraded Nike Inc. to Overweight, citing operational progress, inventory management improvements, and margin stabilisation. Barclays highlighted North America’s double-digit growth in running and sales outpacing inventory, while noting risks from tariffs and geopolitics. The firm sees a favourable risk/reward profile, positioning Nike for renewed long-term growth.

• Argenx was upgraded to Buy by Deutsche Bank, with a €725 price target, citing strong Vyvgart sales momentum, a robust $4bn cash position, and consistent profitability. Despite a mixed Q4 report and management changes, valuation is now attractive, with peak Vyvgart sales above $10bn and 2026 P/E around 26x.

• Analysts issued bullish commentary on Howmet Aerospace after its technology and markets day, citing strong demand in commercial aerospace, defence and gas turbines. RBC Capital Markets, Jefferies and Morgan Stanley highlighted aircraft production growth, rising turbine demand and technology investments supporting market share gains and potential margin expansion.

Upcoming data and events

Today’s key US economic data include initial and continuing jobless claims, the four-week jobless average, housing starts, building permits, and trade balances, alongside the EIA natural gas stock change. Treasury auctions and a Fed Bowman speech may affect markets. Major earnings releases feature Shell plc, Adobe Inc., BMW, Deutsche Bank, Generali, and Wheaton Precious Metals.