Market Summary: What Happened Yesterday and What Awaits Us Today, March 2

Middle East war shakes markets… Oil nears $100 and gold soars

U.S. stock indices closed sharply lower on Friday, capping a volatile month as stronger-than-expected inflation data and escalating geopolitical tensions weighed heavily on investor sentiment.

The Dow Jones Industrial Average fell more than 1%, losing nearly 520 points, while the Nasdaq Composite declined about 0.9% and the S&P 500 dropped 0.4%, with financial and growth stocks leading losses.

Markets came under pressure after the latest Producer Price Index (PPI) report showed a monthly increase of 0.5%, exceeding expectations of 0.3%. The data reinforced concerns that inflation remains persistent, raising the likelihood that the Federal Reserve may keep interest rates higher for longer.

However, inflation worries were overshadowed by geopolitical developments after a major military confrontation erupted in the Middle East involving the United States and Iran. The escalation, which reportedly included strikes resulting in the death of Iranian Supreme Leader Ayatollah Ali Khamenei, triggered retaliatory threats from Iran and heightened risks to global energy supplies following the closure of the Strait of Hormuz.

The situation has shifted market focus from monetary policy uncertainty toward pricing in open-ended geopolitical risk.

Energy and Safe Havens Rally

Oil prices surged amid fears of supply disruptions. West Texas Intermediate (WTI) crude settled near $67.30 per barrel, while Brent crude climbed above $80, with some forecasts pointing toward a potential move to $100 should tensions intensify amid tight global inventories and rising seasonal demand.

Safe-haven assets also rallied sharply. Gold rose to $5,280 per ounce and is projected by some analysts to test the $5,400–$5,600 range in the near term. In a scenario of broader regional escalation, prices could extend gains toward new record highs above $5,700 as investors seek protection from volatility.

Silver jumped more than 7%, reflecting its typically higher sensitivity to shifts in risk sentiment.

Outlook: Markets Brace for Heightened Volatility

Markets are expected to open the new trading week under dual pressure from persistent inflation and geopolitical uncertainty.

Analysts warn that major U.S. indices could face declines of 2% to 4% if negative developments continue, potentially testing key technical support levels. Aviation, travel, manufacturing, and rate-sensitive technology sectors appear most vulnerable, while energy and defense stocks may outperform.

European markets could also face deeper losses due to the region’s dependence on energy imports, with major indices potentially falling between 1.5% and 3% alongside renewed pressure on the euro.

Asian equities may see broad selling if supply-chain risks intensify, particularly in export-dependent economies such as Japan and South Korea.

Currency and Crypto Markets

The U.S. dollar index is expected to strengthen on safe-haven demand, potentially rising more than 1% despite ending last week slightly lower.

Bitcoin, which retreated to $65,600 after briefly approaching $68,000, remains in a fragile range. Analysts expect volatility between $62,000 and $70,000 in the near term. A shift toward digital assets as hedges could push prices toward $72,000, while broader risk aversion could drive a drop below $60,000.

Market Snapshot

Markets now face a rare convergence of inflationary pressure and escalating military conflict, increasing the probability of elevated volatility in the days ahead. Near-term trends favorstronger oil and gold prices, continued pressure on equities, and a firm U.S. dollar, with market direction likely to hinge on rapidly evolving geopolitical developments.