Middle East Conflict Triggers Sharp US Stock Decline, Gold and Silver Plummet; Oil Prices Surge Before Trump Orders Protection of Gulf Shipping Routes

On Tuesday, Eastern Time (March 3), investors experienced a typical “Trump speech shock.” Overnight, U.S. stocks plummeted at the open, with the Dow Jones dropping nearly 1,300 points at one point. Previously, Trump vowed to take “whatever measures necessary” on Iran, sparking concerns that prolonged conflict could push oil prices higher and reignite inflation worries, affecting the Federal Reserve’s rate cut path. However, in the afternoon, Trump announced that insurance and escort services would be provided for oil tankers passing through the Strait of Hormuz. Crude oil, the dollar, and U.S. Treasury yields all fell sharply from their highs, narrowing the decline in U.S. stocks, though the three major indices still closed lower, with the Nasdaq down over 1%.

【U.S. Stock Indices】

At the close, the S&P 500 fell 0.94% to 6,816.63; the Dow Jones dropped 0.83% to 48,501.27; the Nasdaq declined 1.02% to 22,516.69. The S&P 500 closed below its 100-day moving average for the first time since November 20 last year, a potential bearish signal.

As Middle Eastern hostilities entered their fourth day, after Israel and the U.S. launched strikes on Iranian targets, Iran responded with retaliatory attacks in the Gulf region and blocked the Strait of Hormuz, expanding the conflict to Lebanon. Investors are increasingly worried that war could trigger a surge in oil prices, boosting inflation and impacting the Fed’s future monetary policy. Trump’s vow yesterday to “spare no effort” on Iran further heightened panic, with the VIX index soaring to its highest level since April 2025 during trading.

The re-evaluation of inflation expectations driven by geopolitical conflict is changing macroeconomic pricing logic. Sticky inflation has pushed up U.S. Treasury yields and the dollar.

However, in the afternoon, Trump posted on social media that he had ordered the U.S. Development Finance Corporation (DFC) to provide insurance at reasonable prices for all maritime trade passing through the Gulf region, especially energy transportation, offering political risk insurance and financial security. If necessary, the U.S. Navy will begin escorting oil tankers through the Strait of Hormuz as soon as possible. Regardless, the U.S. will ensure the free flow of energy worldwide.

This quickly eased market tensions, with the dollar, oil prices, and Treasury yields retreating from their highs, and U.S. stocks narrowing their losses. Analysts noted that the latest developments help reduce fears of significant disruptions to global supply, ease inflation concerns, and calm the surge in bond yields. Currently, market movements are heavily influenced by headlines, largely depending on whether tensions can stabilize or if this marks the start of a long-term disruption to the global supply chain.

Some analysts believe the market’s response remains “quite restrained,” indicating investors’ risk appetite remains at a certain level.

The Federal Reserve also commented on the Middle East conflict. Minneapolis Fed President Kashkari said today that the escalation of the Iran conflict adds uncertainty to the U.S. economic outlook, making the Fed’s rate path more unpredictable. Gold prices remain under pressure.

However, besides geopolitical risks, investors should also remain cautious of AI panic. Concerns over tech giants’ high capital expenditures and their potential disruptive effects continue to weigh on tech stocks (especially software), with the Nasdaq leading the declines among the three major indices.

【U.S. Treasury Bonds】

U.S. Treasury yields rose sharply and then retreated, with the benchmark 10-year yield closing at 4.061%, and the 2-year yield, sensitive to Fed policy, at 3.516%.

【Popular U.S. Stocks】

Among popular stocks, Nvidia fell 1.33%, Apple declined 0.37%, Google A dropped 0.96%, Google C down 0.91%, Microsoft rose 1.35%, Amazon increased 0.16%, TSMC fell 4.28%, Meta gained 0.23%, Tesla dropped 2.70%, Power Semiconductor fell 3.86%, and Intel declined 5.28%.

In major news, Meta has signed a multi-year AI content licensing agreement with News Corp, paying up to $50 million annually.

Apple announced updates to its MacBook lineup during the second wave of spring product launches, featuring the M5 chip in the MacBook Air and the new M5 Pro/M5 Max chips in the MacBook Pro.

Google launched the GEMINI 3.1 FLASH-LITE model.

【Global Indices】

In Europe, the FTSE 100 plunged 2.75% to 10,484 points. France’s CAC 40 fell 3.46% to 8,104 points. Germany’s DAX dropped 3.44% to 23,791 points.

In Asia, the Hang Seng Index declined 1.12% to 25,768 points. The China Enterprises Index fell 1.07% to 8,609 points. The Nikkei 225 dropped 3.06% to 56,279 points.

【China Indices】

On March 3, overnight, the Hang Seng Tech Index futures fell 2.16%, the Nasdaq China Golden Dragon Index declined 3.34%, and the FTSE China A50 Index dropped 0.14%.

【Chinese Concept Stocks】

Popular Chinese concept stocks included Tencent Holdings (HK) down 0.68%, Alibaba down 4.87%, Pinduoduo down 2.05%, NetEase up 0.32%, Baidu down 3.93%, Ctrip up 0.43%, Li Auto down 2.90%, Xpeng Motors down 6.62%, and NIO down 2.75%.

【Forex and Commodities】

On Tuesday, escalating tensions in the Middle East heightened market expectations of persistent global inflation, leading to broad demand for safe-haven assets. The dollar index strengthened, rising 0.68 to 99.052.

Affected by the dollar’s strength and bleak rate cut prospects, spot gold plunged by $300 intraday, with London gold ending down 4.83% at $5,087.50 per ounce; London silver also fell 8.8%, closing at $82 per ounce.

Due to the blockade of the Strait of Hormuz, international crude oil surged nearly 8%. Later, Trump announced insurance for maritime oil transport, with the Navy escorting if necessary, causing oil prices to retrace some gains. WTI crude settled up 5.22% at $74.95 per barrel; Brent crude rose 5.43% to $81.96 per barrel.

【Key News Highlights】

Trump Orders to Protect Gulf Shipping; Iran Warns Ships Not to Pass Through Strait of Hormuz

Trump stated that he has directed relevant companies to provide insurance for maritime trade in the Gulf region, and that the U.S. military will escort oil tankers through the Strait of Hormuz if necessary, without specifying operational details. U.S. oil futures initially gained less than 0.7%. Iran’s military warned that ships passing through the Strait of Hormuz could face risks from missiles or uncontrolled drones. Analysts say that if Iran continues to resist, even with U.S. guarantees, full recovery of shipping traffic in the strait could take weeks.

Both U.S. and Iran “Spare No Effort”; Trump Boasts of “Unlimited” Ammunition and Will Respond to Embassy Attacks Soon

The Middle East conflict continues to escalate, with Iranian drones attacking U.S. embassies in Saudi Arabia and Kuwait, and Israel conducting airstrikes in Tehran and Beirut. Trump threatened with “almost unlimited” ammunition and vowed to “spare no effort” to complete missions; Iran declared it is prepared for a “long-term war.”

Trump Meets with Mertz, Threatens Spain with Trade Cuts; Warns Iran Will Suffer Greater Strikes

Trump warned Iran will face greater blows, claiming Iran’s military capabilities are nearly destroyed; criticized Spain and the UK for lacking cooperation on Iran actions; high oil prices will persist for a while, and after U.S. actions against Iran, prices might even fall below pre-action levels. Spain said the U.S. must respect bilateral agreements with the EU. Mertz said the EU will not accept any terms worse than existing trade agreements, and has reached a critical point on tariffs; the U.S. cannot impose prohibitive trade measures solely on Spain.

U.S. Congress Likely to Vote on Iran Action This Week; Short-term Impact on Trump Unlikely

Regarding Iran, Trump is unlikely to be constrained in the short term by a Republican-controlled Congress. A vote is expected this week on a bill to stop U.S. military actions against Iran, likely along party lines. House Speaker Mike Johnson said, “Depriving our Commander-in-Chief—the President—of the authority to carry out this mission now is a frightening prospect. It’s dangerous. I certainly hope, and believe, we have enough votes to veto this proposal.”

Fed Official: War Shadows Economy; Fed Likely to Hold Steady

Minneapolis Fed President Kashkari compared the current situation to the 2022 Russia-Ukraine conflict, saying, “Back then, I thought it was temporary. It was indeed temporary, just more severe and longer-lasting than we expected. Do we really want to go through another temporary 2.0?” The “New Federal Reserve Communications” reports that a stable labor market and desire for more inflation progress make a rate cut before summer unlikely, and the Iran war adds another reason to wait.

Oil Production in Iraq May Drop by 3 Million Barrels Daily Due to Strait Blockade and Tanker Saturation

According to CCTV News, on March 3, Iraq’s Ministry of Oil issued a statement that due to the closure of the Strait of Hormuz causing disruptions in international shipping, oil tankers are blocked from entering the Persian Gulf. The southern ports in Iraq are experiencing shortages of oil tankers, and the Rumaila oil field in southern Iraq has announced a production halt. Additionally, the Kurdish Autonomous Region in northern Iraq announced a suspension of oil exports to Turkey’s Ceyhan port. If the blockade persists, daily production could drop by up to 3 million barrels, accounting for about two-thirds of total capacity.

Qatar Continues to Shut Down the World’s Largest LNG Plant; European Natural Gas Surges 32%; Goldman Raises Price Forecast Significantly

Qatar’s LNG export facilities were forced to shut down after an Iranian drone attack. Coupled with the actual closure of the Strait of Hormuz, European natural gas futures surged over 60% in two days, with a single-day increase of 32%. Goldman raised its European gas price forecast for April 2026 from 36 euros to 55 euros. Asian buyers are rushing to purchase, and Europe’s summer storage replenishment logic is collapsing. The most intense energy shock since 2022 is spreading.

Google Launches Fastest and Most Cost-effective Gemini 3 Model; Response Time Increased 2.5x, Output Speed Up 45%

Gemini 3.1 Flash-Lite is designed for large-scale, high-frequency workloads for developers. The preview is open to developers starting Tuesday. It features a “thinking hierarchy.” Benchmark tests show that the first response time is 2.5 times faster than Gemini 2.5 Flash, and output speed is 45% higher. Scores on GPQA Diamond and MMMU Pro surpass competitors like GPT-5 Mini. Priced at $0.25 per million input tokens and $1.50 per million output tokens, with a context window up to 1 million tokens.

Apple Significantly Raises MacBook Prices

Apple announced updates to its MacBook lineup during the second wave of spring product launches, featuring the M5 chip in the MacBook Air and the new M5 Pro/M5 Max chips in the MacBook Pro. Apple said the base storage in the M5 MacBook Air doubles to 512GB, with options up to 4TB, and the SSD read/write speeds are twice as fast as the previous generation. The starting price for the basic M5 MacBook Air is $1,099 (8499 RMB), which is $100 and 500 RMB more than the M4 version.

Qualcomm CEO: AI Agents Will Replace Phones as the Digital Center

Qualcomm CEO Cristiano Ammon said at the Barcelona MWC this week that the upcoming wave of AI agents will revolutionize the broader digital ecosystem. During his keynote, he called 2026 “the year of intelligent agents.” He believes these services, capable of executing complex, multi-step tasks or proactively assisting users, will require massive amounts of data and real-time contextual information, increasing the importance of all devices as data sources.

Meta Signs Multi-year AI Content Licensing Deal with News Corp

Meta has signed a multi-year AI content licensing agreement with News Corp, paying up to $50 million annually. According to sources, the deal lasts at least three years and allows Meta to use the company’s content in the U.S. and UK. The agreement enables Meta to retrieve the latest information for its AI products and use other content (such as news archives) for model training. The scale of this deal reflects the increasing value tech companies place on news content—helping train AI models and providing real-time information to users via chatbots and other tools.