3/03/2026 Daily Reports
Middle East Conflict Whipsaws Markets: Nasdaq Rebounds, DAX Sinks, Oil Jumps as Hormuz Traffic Stalls
- Global markets turned highly volatile following the outbreak of a U.S.–Israel conflict with Iran over the weekend. In the U.S., the Nasdaq Composite recovered from steep early losses to post modest gains, supported by strength in energy shares and major technology stocks. Investor sentiment remains tightly linked to geopolitical headlines. In corporate developments, Nvidia announced a $4 billion investment in photonics firms Coherent Corp. and Lumentum, reinforcing long-term AI infrastructure optimism.
- In Europe, Germany’s DAX dropped more than 2% intraday as surging geopolitical risk and a dramatic 40–50% spike in European natural gas prices rattled investors. The jump followed drone strikes on QatarEnergy facilities, reviving fears of energy-driven inflation across the region.
- Japan’s Nikkei 225 fell between 1.5% and 2.4%, retreating from record highs reached before the weekend. The earlier rally had been fueled by the so-called “Takaichi trade” and continued dovish policies under Prime Minister Sanae Takaichi.
- Oil markets reacted sharply. Brent crude surged more than 6% as traffic through the Strait of Hormuz effectively stalled. Meanwhile, Saudi Aramco temporarily suspended operations at its Ras Tanura refinery following a drone strike, intensifying supply disruption fears and keeping risk premiums elevated.
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Supply at Risk: The Strait of Hormuz Becomes the Market’s Focal Point
Energy Markets :
- Brent surged 7.26%, after spiking as much as 13.6% intraday — markets are repricing Middle East risk fast.
- The Strait of Hormuz is the critical choke point:
- ~20% of global LNG trade
- ~6m b/d of refined product flows
- A broader infrastructure attack risk could trigger longer-lasting supply outages.
- Time spreads signal tight prompt supply:
- 12-month ICE Brent backwardation jumped from <$5 to >$9.50/bbl
- May/Jun spread widened toward $1.60/bbl backwardation
- US response in focus:
- Secretary of State Marco Rubio signaled plans to mitigate energy costs.
- No immediate release from the Strategic Petroleum Reserve (SPR) — but prolonged disruption increases odds of coordinated emergency releases.
European Gas & LNG – The Biggest Move:
- Dutch TTF gas surged as much as 54%, briefly nearing €50/MWh.
- QatarEnergy halted LNG operations amid attack risks.
- The global LNG market is already tight — EU storage levels add further vulnerability.
- If Hormuz shipping disruptions persist, gas markets could remain structurally stressed.
