President Trump claims 9 ships sunk and leaders killed in Iran attack
President Donald Trump said on Truth Social that US and Israeli attacks have sunk Iranian ships and killed dozens of leaders.
U.S. stock futures opened sharply lower on Sunday night, March 1, as global investors reacted to the weekend attacks in the Middle East that killed Iran’s supreme leader Ayatollah Khamenei, disrupted global energy supply chains and threatened broader conflict.
Geopolitical events are always a potential source of market disruption, but they rarely have serious and far-reaching effects. Some analysts say the weekend skirmish between the US, Israel and Iran could turn out to be different.
“We expect markets to react more broadly to this weekend’s attacks than to other recent geopolitical events,” TD Securities analysts said in an analysis published March 1. This is because the impact is broader. Energy supplies will be disrupted in the short term, despite the looming possibility of further conflict.
Additionally, Jay Hatfield, CEO and CIO of fund management firm Infrastructure Capital Advisors, said in an email exchange with USA TODAY that stocks were already being weighed down by concerns about AI disruption and distressed private credit markets.
What to expect when the market opens
Hatfield said he expects investors to sell stocks and buy bonds. The trading had already begun days before the strike, with investors beginning to price in a possible 0.4% decline in the S&P 500 index on Friday, with the benchmark 10-year U.S. Treasury note down 5 basis points to close below 4%. The yield (interest rate) on a bond falls when its price rises, and vice versa.
U.S. stock index futures each fell about 1% on Sunday.
Analysts at Goldman Sachs said in a March 1 article that global investors are flocking to the dollar, which could strengthen after a brief selloff. Similarly, while U.S. stocks have performed worse than the “rest of the world” so far this year, the S&P 500 is essentially unchanged. Meanwhile, the Vanguard FTSE All World Old US Index Fund ETF is up more than 11%, putting the US in a good position to withstand a prolonged oil price shock.
Analysts are also wary of oil prices reaching at least $90 a barrel, and possibly more. Brent crude oil, the world benchmark, was trading at around $80 per barrel at around 6pm ET on March 1st.
Gold may be one of the biggest winners in this conflict. Precious metals “could rally as much as $200 an ounce on the move, and silver could rise as well,” TD analysts wrote.
