Daily Market Outlook, March 2, 2026
Daily Market Outlook, March 2, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
The ongoing conflict in the Middle East shook global investor confidence, causing markets to tumble and oil prices to rise. This uncertainty sparked a rush away from riskier investments, pushing up the value of safe-haven assets like gold and the US dollar.Rattled by fresh worries over artificial intelligence and possible credit risks, all amid sky-high valuations, stock markets now face another challenge: escalating military tensions in Iran and the surrounding region. This growing instability poses a serious threat to global trade and travel. Investors are particularly uneasy about the potential impact on oil prices and inflation, which has already contributed to U.S. stocks hitting their lowest point since April just last month.
The oil market has taken center stage in early trading following the eruption of military conflict in the Middle East. Brent crude surged past $80 per barrel during Asian trading hours, marking a sharp 13% rise from Friday’s close of $72.48 per barrel at its peak. This initial spike in oil prices mirrors the reaction observed after U.S. strikes on Iran in June last year. At the time of writing, prices have slightly eased marginally, following reports from The Wall Street Journal indicating that Iran may resume nuclear talks, and President Trump could reconsider sanctions if Iran’s new leadership adopts a pragmatic approach. However, with regime change reportedly being a goal for Trump, the likelihood of a prolonged conflict compared to the June 2025 episode appears plausible, though not guaranteed. Should Iran retaliate by targeting regional energy infrastructure or restricting tanker access through the Strait of Hormuz, oil prices could climb significantly higher than the $80 per barrel mark, rather than quickly returning to pre-conflict levels as seen previously. While OPEC has announced a 206,000 barrels-per-day supply increase starting next month to stabilize the market, its impact may be limited if logistical challenges hinder the transport of additional output.
In contrast, Asian equities have experienced more moderate declines, though a clear risk-off sentiment is evident. Many indices across the region have dropped around 1.5% today, with notable sector-specific disparities. For example, Japan’s Nikkei energy sector saw gains, while airlines with regional exposure initially plummeted by approximately 10%. It’s still too early to determine how deeply this risk-averse mood will affect equity markets. However, given that many markets have been trading at elevated valuations, this geopolitical event could trigger profit-taking, potentially accelerating a broader market correction.
The trajectory of the conflict will play a critical role in shaping economic and financial impacts. While retaliation from Iran was anticipated, the targeting of civilian areas like Dubai has caught many by surprise. If such attacks persist and extend beyond U.S. regional military bases, the global economic and financial repercussions could intensify. This would challenge assumptions about the steady flow of capital, investment, and resources into hubs like Dubai. In severe scenarios, the financial ramifications could influence President Trump’s strategy in the region, depending on the economic and market fallout. For now, caution is likely to prevail as investors assess the evolving situation, not only in terms of Iran’s actions but also regarding the responses from other governments and the Federal Reserve.Overnight U.S. Treasury trading reflected a steeper yield curve, with the 10-year rate climbing slightly to 3.97% from Friday’s 3.94%. While the steepening aligns with a risk-off environment, the slight uptick in yields suggests a stronger focus on the inflationary implications of rising oil prices rather than a broad flight to safe-haven assets. However, this dynamic could shift rapidly depending on how the conflict unfolds and the market’s expectations regarding its duration and severity.
In the U.K., gilts may face challenges in maintaining last week’s strong performance, particularly given the subdued tone in U.S. Treasuries. The Bank of England’s upcoming rate decision on March 19 remains uncertain, and tomorrow’s Spring Statement, already expected to have a low profile, is likely to be overshadowed by the unfolding geopolitical developments. In the foreign exchange market, G10 currencies saw relatively minor movements. The U.S. Dollar index rose by about 0.3% from Friday’s close. Traditional safe-haven currencies like the Swiss Franc remained nearly flat at 0.77 against the Dollar, while the Japanese Yen weakened slightly from 156 to 157 against the Dollar. The Dollar’s safe-haven appeal was more evident against the Euro, with the exchange rate shifting from 1.1820 late Friday to around 1.1770 today. Gold, another safe-haven asset, rose by approximately 1.8% to $5,375 per ounce, though this reaction appears relatively muted compared to the volatility seen earlier in 2026. Oil price surge has been the most pronounced market reaction to the escalating geopolitical tensions in the Middle East. While other asset classes, including equities, bonds, currencies, and precious metals, have displayed relatively restrained responses, the situation remains fluid. Any escalation or prolongation of the conflict could significantly deepen risk aversion and lead to more pronounced market volatility in the days ahead.
Overnight Headlines
Oil Spikes As Widening Iran Crisis Disrupts Flows Through Hormuz
Japan Shipping Group: Strait Of Hormuz Closed To Energy, Other Traffic
More LNG Tankers Divert From Hormuz In Widening Iran Crisis
Goldman Says European Gas Could Jump 130% On Hormuz Disruption
Gold, Silver Rise As Middle East Conflict Spurs Safe-Haven Demand
Dollar Surges As Traders Brace For War Impact
Trump Says Strikes To Continue In Iran Until Objectives Are Met
Trump Warns More US Casualties Possible In Iran Operation
UK Allows US Use Of Bases To Destroy Iranian Missile Depots
OPEC+ To Resume Oil Output Increase As Iran Conflict Rages
Shipping Companies Divert Vessels Around Cape Of Good Hope
Kyiv Says Russia Accepted US Plan For Ukraine Security Guarantees
UK Chancellor Reaps £22B Windfall As Britain’s Tax Take Surges
People Are Complacent About Risk Of Financial Crisis, Says Lloyd Blankfein
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1750 (EU2.11b), 1.1800 (EU1.97b), 1.2300 (EU809.8m)
USD/JPY: 157.00 ($587.7m), 155.00 ($532.3m), 145.42 ($400m)
AUD/USD: 0.7050 (AUD742.6m), 0.7000 (AUD629.2m), 0.7060 (AUD461.6m)
USD/CNY: 6.9800 ($1.44b), 7.0335 ($894m), 6.9000 ($680m)
EUR/GBP: 0.8700 (EU456.2m), 0.8825 (EU357.1m)
GBP/USD: 1.3355 (GBP386.6m), 1.3350 (GBP383.5m)
USD/CAD: 1.3000 ($700m), 1.3680 ($483.6m), 1.3665 ($348.6m)
CFTC Positions as of February 27, 2026:
- S&P 500 CME net short: +14,318 contracts (465,965 total)
- S&P 500 CME net long: +36,890 contracts (1,005,549 total)
- CBOT US 5-year Treasury futures net short: -92,311 contracts (2,064,931 total)
- CBOT US 10-year Treasury futures net short: -103,833 contracts (774,020 total)
- CBOT US 2-year Treasury futures net short: +113,628 contracts (1,348,036 total)
- CBOT US UltraBond Treasury futures net short: +5,299 contracts (280,487 total)
- CBOT US Treasury bonds futures net long: -1,351 contracts (5,074 total)
- Bitcoin net long position: 1,172 contracts
- Swiss franc net short: -41,186 contracts
- British pound net short: -57,072 contracts
- Euro net long: 156,856 contracts
- Japanese yen net long: 11,539 contracts
Technical & Trade Views
SP500
Daily VWAP Bearish
Weekly VWAP Bearish
Above 6900 Target 7040
Below 6900 Target 6750
EURUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.1860 Target 1.1960
Below 1.1730 Target 1.1570
GBPUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 1.3635 Target 1.3760
Below 1.36 Target 1.3435
USDJPY
Daily VWAP Bullish
Weekly VWAP Bullish
Above 155.50 Target 157.50
Below 155 Target 152
XAUUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 5150 Target 5325
Below 5100 Target 4930
BTCUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Above 71k Target 75k
Below 70k Target 53k
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Past performance is not indicative of future results.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!