U.S. to back ships through Strait of Hormuz

Equity markets finished lower on Tuesday, although major US indices recovered from steeper intraday losses by the close. The Nasdaq Composite fell 1 per cent to 22516.69, the Dow Jones Industrial Average declined 0.8 per cent to 48501.27, and the S&P 500 dropped 0.9 per cent to 6816.63, after each had been down more than 1.5 per cent earlier in the session. Asian and European markets also ended the day in negative territory. Volatility spiked during trading, with the CBOE Volatility Index touching its highest level since April 2025 before easing back. The US dollar strengthened against major currencies as investors sought the relative safety of the world’s reserve currency.

The pullback in equities came amid rising oil prices and higher bond yields, as supply disruptions linked to tensions around the Strait of Hormuz pushed crude prices sharply higher. West Texas Intermediate crude rose more than 4 per cent on the day, lifting inflation expectations and contributing to a rise in US Treasury yields, with the 10 year yield moving above 4 per cent. Markets are reassessing the outlook for Federal Reserve rate cuts, with expectations shifting towards a slower pace of policy easing. Despite the near term volatility, investors continue to identify opportunities across cyclical and value sectors, US mid cap equities with greater domestic exposure, and selected emerging and international markets tied to global technology growth.

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• Asian equities fell sharply as escalating US Iran tensions and surging oil prices hit risk appetite. South Korea’s KOSPI plunged 11 per cent, led lower by Samsung Electronics, SK Hynix and Hyundai Motor Company. China’s CSI 300 and Hong Kong’s Hang Seng Index declined on mixed PMI data, while Australia’s ASX 200 retreated despite firm growth.

• US equity index futures continued to fall overnight as the Middle East conflict heightened concerns over energy driven inflation. S&P 500 Futures dropped 0.15% to 6,815 points, Nasdaq 100 Futures fell 0.15% to 24,718, and Dow Jones Futures declined 0.15% to 48,491, reflecting cautious sentiment ahead of key US economic data this week.

• European equities fell sharply as Iran’s attacks on GCC energy infrastructure and Strait of Hormuz threats sparked fears of an energy shock. The Euro Stoxx 50 dropped 3.5 percent, with banks leading losses, Santander minus 6.2 percent, BBVA and UniCredit minus 5 percent. Industrial and chemical equities, including Siemens, Schneider, and Bayer, also slumped over 5 percent.

• The US dollar strengthened to a three month high against the Euro, slipping 0.3 per cent to $1.1581 as escalating Middle East tensions raised concerns over sustained energy price rises. The dollar index climbed to 99.284, its strongest since late November, reflecting broad investor demand for safe haven assets amid inflationary and geopolitical pressures.

• Oil prices extended sharp gains in Asian trade as intensifying US Israel Iran tensions fuelled supply disruption fears. Brent Crude rose 1 per cent above 82 dollars, while West Texas Intermediate gained 0.7 per cent. Threats to shipping through the Strait of Hormuz added a risk premium, although US naval escort plans may temper further increases.

• Israeli Prime Minister Benjamin Netanyahu said the U.S. and Israel’s war against Iran may take time but will not last years, rejecting claims of an open-ended conflict. He described the strikes, following Iranian retaliation, as aimed at curbing Iran’s nuclear programme, and urged Iranians to “take back your country,” while envisioning lasting Middle East peace.

Equities on the move

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

• Shares in Samsung Electronics fell sharply after reports that mass production at its Taylor Texas chip plant will be delayed until early 2027. The 37 billion dollar facility had been expected to ramp up sooner, including production of advanced two nanometre chips. The shares finished 8 per cent lower, despite major orders such as a reported contract with Tesla Inc.

• Santander’s $12.2 billion purchase of US lender Webster Financial could be delayed after President Trump suspended trade with Spain, triggered by Spain denying US military base use for Iran operations and NATO spending disputes. Rising tensions may hinder regulatory approval and reduce the deal’s value, causing sharp declines in both Santander’s and Webster’s share prices.

• CrowdStrike forecast fiscal 2027 revenue above estimates, driven by demand for its AI-powered cybersecurity amid rising cloud adoption and cyberattacks. Q4 revenue rose 23% to $1.31 billion, with adjusted EPS beating estimates. The company plans acquisitions of SGNL ($740 million) and Seraphic Security ($420 million), despite higher fiscal 2026 costs from a Windows outage.

• Pinterest said activist investor Elliott will buy $1 billion in fresh equity, backing a $3.5 billion share buyback to reduce outstanding shares. Elliott, already the company’s fourth-largest shareholder, signals confidence amid weak ad spending and rising competition from Meta, Google, and AI-driven platforms. Pinterest aims to boost growth via AI shopping tools, with 619 million users.

• Goldman Sachs CEO David Solomon said he was surprised by the “benign” market reaction to the Middle East conflict, noting it may take weeks for investors to fully assess impacts. Despite spiking oil prices and rising inflation concerns, US equities have only fallen modestly, supported by strong macroeconomic tailwinds and regulatory easing.

• Morgan Stanley upgraded Novo Nordisk to Equal-weight, saying the 40% share decline now reflects mid-term risks, including semaglutide patent cliffs and CagriSema positioning. Strong Wegovy Pill prescriptions support forecasts, despite U.S. sales weakness. The bank expects 5% sales and 4% EBIT growth over 2026–2029, viewing 2026 as a transitional year amid rising competition.

• HSBC upgraded Block to Buy after Q4 2025 results, raising its target to $77, citing stronger earnings and a significant valuation de-rating. Workforce cuts are seen as boosting profitability. HSBC raised 2026 earnings and EPS estimates, noted back-end-loaded growth, and expects 2027-28 consensus forecasts to rise, highlighting an attractive risk-reward profile.

• Jefferies upgraded Deutsche Boerse to Buy with a €270 target, citing cheap valuation, resilience to AI disruption, and potential for higher trading volumes amid market volatility. Around half of revenue is insulated from AI. Strength at European Energy Exchange and Eurex, plus the ALLFG acquisition, supports growth, while shares remain 25% below last year’s peak.

Upcoming data and events

Today's main economic releases include Japan’s February Consumer Confidence and multiple U.S. indicators, including ADP employment, ISM and S&P Global services PMIs, and EIA oil stock changes. The Fed’s Beige Book is also scheduled. Major earnings reports feature Broadcom, Bayer, Adidas, Dassault Aviation, Brown-Forman, and Okta.