Markets Overview

  • ASX SPI 200 futures down 0.1% to 9,146.00
  • S&P 500 up 0.3% to 6,898.60
  • Dow Average little changed at 49,019.28
  • Aussie down 0.2% to 0.7104 per US$
  • US 10-year yield rose 10.8bps to 4.0479%
  • Australia 3-year bond yield fell 3 bps to 4.19%
  • Australia 10-year bond yield fell 1.8 bps to 4.63%
  • Gold spot up 1.0% to $5,331.77
  • Brent futures up 6.3% to $77.49/bbl

Economic Events

  • 08:10: (AU) RBA’s Bullock-Speech
  • 11:00: (AU) Australia to Sell A$300 Million 3% 2047 Bonds on March 3
  • 11:30: (AU) Jan. Building Approvals MoM, est. 5.0%, prior -14.9%
  • 11:30: (AU) 4Q BoP Current Account Balance, est. -A$16.5b, prior -A$16.6b
  • 11:30: (AU) 4Q Net Exports of GDP, est. -0.3, prior -0.1
  • 11:30: (AU) Jan. Private Sector Houses MoM, prior 0.4%

Oil surged as the Iran war threatened to snarl shipping lanes, stoking inflation fears that pummeled bonds amid diminishing odds for a rate cut. The dollar rose. Stocks erased losses.

Also weighing on Treasuries were figures showing manufacturing expanded, with input prices jumping. Ten-year yields headed toward their biggest advance since April. The S&P 500 was little changed after a slide that earlier topped 1%. Energy and defense shares gained. Several tech firms with solid balance sheets rallied. Airlines sank. Gold topped $5,300.

The near halt to traffic through the Strait of Hormuz and disruption at a big refinery in Saudi Arabia underscored the threat to oil supplies. West Texas Intermediate jumped 6.3% to settle at $71.23. European natural gas prices soared as Qatar shut the world’s largest LNG export plant.

“There are more questions than answers right now,” said Chris Larkin at E*Trade from Morgan Stanley. “A stabilizing energy picture could have a positive ripple effect, while concerns about a longer-term disruption could have the opposite.”

As US-Israeli strikes on Iran reverberated across the Middle East, President Donald Trump called on the nation’s leaders to capitulate, while the Islamic Republic’s security chief ruled out negotiations. US Defense Secretary Pete Hegseth rejected the idea of an “endless” war.

The recovery in major equity indexes from session lows suggests that, for now, the market views the conflict as a relevant geopolitical risk, but one that remains financially contained in the immediate term, according to Antonio Di Giacomo at XS.com.

The yield on 10-year Treasuries climbed 10 basis points to 4.04%. Traders are now fully pricing in a first Federal Reserve rate cut for September, with bets on a third reduction in 2026 almost evaporating. The dollar rose 0.7%.

Morgan Stanley strategists led by Mike Wilson see the conflict in the Middle East as unlikely to derail their bullish view on US stocks, barring a sharp and sustained surge in oil.

“In the end, the Iran military action should remove major uncertainty in the world, and the stock market is expected to have a relief rally as new, pro-Western leadership in Iran emerges and crude oil exports resume,” said veteran strategist Louis Navellier.

The current geopolitical escalation should ultimately be a buying opportunity in stocks as fundamentals remain positive, according to JPMorgan Chase & Co. strategists led by Mislav Matejka.

Meantime, Lori Calvasina says investors should be careful about paying too much attention to studies that suggest always buying stocks after geopolitical conflicts.

The RBC Capital Markets strategist warns that evidence for rebounds doesn’t always reflect the risks around wider wars.