03/04/2026
From Zacks Investment Research:
US-Iran Tensions: What Investors Need to Know
Stocks have been on a wild ride as investors weigh the implications of the US–Iran war for financial markets. Oil prices initially surged about 8% yesterday before giving up part of those gains.
Investors took profits on earlier big winners and rushed into traditional havens, particularly Treasury bonds and the US dollar. Gold, another classic safe haven, was down. The metal typically moves inversely to the dollar and is already up more than 20% this year.
President Trump’s social media post that wars can be fought “forever, and very successfully” rattled markets, reinforcing concerns that the conflict could drag on.
At the same time, many experts believe Trump would prefer to avoid a protracted war and the resulting spike in oil prices, given the potential impact on the outcome of the midterm elections.
Oil prices could rise further if supply disruptions intensify. Higher energy costs would likely feed into inflation and reduce the likelihood of additional rate cuts. The Russell 2000 index of small-cap stocks was hit hardest yesterday, as smaller companies tend to be among the biggest beneficiaries of lower interest rates.
Trump said the US Navy could es**rt oil tankers through the Strait of Hormuz, the world’s most important transit route for crude oil, through which roughly 20% of global oil supply passes. Shipping companies have been avoiding the route due to fears of Iranian attacks.
Iran has also continued missile strikes on oil facilities in US-allied Middle Eastern countries, including the United Arab Emirates, Qatar, and Saudi Arabia, all major oil exporters.
Brent crude prices surged to nearly $85 yesterday. Stocks in countries such as South Korea, Japan, and Taiwan, which are heavily dependent on oil and natural gas imports, were sold off.
In addition, Iran may pursue other forms of retaliation. “There’ll be cyberattacks or terrorist attacks, either here or around the world,” JPMorgan CEO Jamie Dimon said in an interview.
So far, however, the broader market reaction has been relatively benign. Aside from energy stocks, shares of large defense contractors have also rallied this week.
Good Investing,
Dan Fisher
