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March 3, 2026 – 14:31

(Bloomberg) — A selloff in stocks and bonds deepened as the war in Iran entered its fourth day with no sign of de-escalation, heightening fears of a lengthy disruption to energy markets and a surge in inflation.

S&P 500 futures tumbled 1.6%. European and Asian equity benchmarks headed for their worst two-day drop since April. Brent crude rose 7% and briefly topped $85 a barrel for the first time since July 2024. European gas added 28% to Monday’s gains as the world’s largest LNG export plant in Qatar stayed shut.

Gold fell 2.9% after a four-day rally. The dollar remained the haven of choice, rising 0.7%. Concern that energy prices could remain elevated pushed global yields higher for a second day.

Ten-year Treasury yields climbed six basis points to 4.10% as expectations dimmed for a second Federal Reserve cut in 2026. A surprise acceleration in euro-area inflation added to bets that the European Central Bank could raise rates this year. The yield on two-year UK gilts surged 16 basis points.

As the US-Israeli war on Iran reverberated across the Middle East, President Donald Trump insisted there was no fixed timeline, while Secretary of State Marco Rubio said “the hardest hits are yet to come.” The US embassy in Riyadh was attacked by drones, while Israel sent soldiers into southern Lebanon, where the Iran-aligned Hezbollah militia is based.

“Sentiment is gradually drifting from an orderly selloff to a panic selloff,” said Joachim Klement, head of strategy at Panmure Liberum. “We are now starting to see overreaction by investors. This increased panic selling may last for a little longer, but will eventually open up buying opportunities.”

A key focus for traders is what happens in the Strait of Hormuz, a narrow waterway off the coast of Iran that carries about a fifth of global oil supply.

Attention is also turning to the region’s vast array of energy infrastructure, with a fire at a major storage hub in the United Arab Emirates underscoring the risk to supplies.

“There was definitely a degree of complacency in US equity market valuations at close yesterday, and a perception that military conflict in Iran was a self-contained geopolitical risk,” said Emma Moriarty, portfolio manager at CG Asset Management. “Comments from the White House yesterday suggest a will to make the conflict more durable and to do whatever it takes.”

One of the day’s most pronounced moves came in South Korea, which slumped 7.2% as markets reopened after a holiday. Samsung Electronics Co. and SK Hynix Inc. dropped more than 10%.

Nvidia Corp. fell 2.8% in US premarket trading as officials consider capping the number of artificial-intelligence accelerators the company can export to any single Chinese customer.

In Europe, banks and insurers are now in negative territory for the year as rising bond yields weigh on valuations. Deutsche Bank AG and BNP Paribas SA slumped more than 5%.

“Geopolitics is difficult to trade,” wrote Mohit Kumar, chief strategist for Europe at Jefferies. “We are happy to be overweight cash right now, waiting for more clarity and then use market moves to buy the dip.”

What Bloomberg Strategists Say:

“The massive flattening of the global yield curves has only just begun. Bonds are just waking up to the reality that the war in the Middle East will stoke inflation all over again. Front-end maturities are taking the biggest hit thanks to a more hawkish re-pricing of central bank trajectories.”

— Ven Ram, macro strategist. For the full analysis, click here.

Corporate Highlights:

Saudi Aramco is exploring the option of delivering more cargoes to Yanbu, a port in the Red Sea that’s situated outside the Persian Gulf, where dozens of ships are hunkered down as the Strait of Hormuz remains effectively closed. Target Corp. forecast better-than-expected profit for the full year, indicating the big-box retailer’s turnaround plans are generating results. Airlines around the globe are suspending more flights to additional destinations across the Middle East as the scope of the war expands during its fourth day. Blackstone Inc. is allowing investors to redeem a record 7.9% of shares from its flagship private credit fund, the latest sign of unease in an industry that’s faced a wave of withdrawals. Fitch Ratings downgraded Paramount Skydance Corp.’s corporate and long-term borrower ratings to junk following the media company’s agreement to buy larger rival Warner Bros. Discovery Inc. A $1.75 trillion valuation for Elon Musk’s SpaceX in an initial public offering would be “justifiable,” according to a PitchBook analyst. On Holding AG’s forecast for sales this year disappointed investors looking for faster growth from the sneaker maker backed by tennis great Roger Federer. Some of the main moves in markets:

Stocks

S&P 500 futures fell 1.6% as of 8:28 a.m. New York time Nasdaq 100 futures fell 2% Futures on the Dow Jones Industrial Average fell 1.4% The Stoxx Europe 600 fell 2.9% The MSCI World Index fell 0.8% Currencies

The Bloomberg Dollar Spot Index rose 0.7% The euro fell 0.8% to $1.1599 The British pound fell 0.7% to $1.3309 The Japanese yen fell 0.3% to 157.79 per dollar Cryptocurrencies

Bitcoin fell 3.3% to $67,106.9 Ether fell 4.2% to $1,957.42 Bonds

The yield on 10-year Treasuries advanced six basis points to 4.10% Germany’s 10-year yield advanced eight basis points to 2.79% Britain’s 10-year yield advanced 16 basis points to 4.54% Commodities

West Texas Intermediate crude rose 7.1% to $76.32 a barrel Spot gold fell 2.9% to $5,169.09 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Neil Campling, Subrat Patnaik and James Hirai.

©2026 Bloomberg L.P.