Oil jumps, stocks sell off as trading gets underway amid Iran strikes

Global investors reacted to the weekend strikes in the Middle East by selling U.S. stocks in futures markets. Some assets may benefit, however.

U.S. stock futures opened sharply lower on Sunday evening, March 1, as global investors reacted to the weekend strikes in the Middle East that killed Iran’s Supreme Leader Ayatollah Ali Khamenei, snarled global energy supply chains, and threatened a broader conflict.

Geopolitical events are always a potential source of market upheaval, but they rarely have severe, widespread impacts. The weekend skirmishes between the U.S., Israel, and Iran could be different, some analysts say.

“We expect markets to react more broadly to this weekend's attacks than other recent geopolitical events,” said analysts at TD Securities in an analysis released March 1. That's because the impacts are more broad-based. Energy supplies are disrupted in the short term, even as the possibility of the conflict spreading looms.

What’s more, stocks were already on the back foot due to fears of disruptions from AI and distress in the private credit markets, said Jay Hatfield, CEO and CIO at Infrastructure Capital Advisors, a fund management firm, in an email exchange with USA TODAY.

Expect investors to sell stocks and buy bonds, Hatfield said. That trade had already begun in the days before the strikes, as investors began to price in the possibility that the S&P 500 fell 0.4% on Friday, while the benchmark U.S. 10-year note fell five basis points to close below 4%. Bond yields (interest rates) fall when prices rise, and vice versa.