MARKET WRAPS

Stocks:

Investors offloaded stocks and government bonds on Monday as markets braced for a protracted Middle East conflict and the potential for even higher oil prices.

European indexes were all firmly in the red, with banks, industrials and technology companies hit hard by the surge in oil prices past $100. ASML, Schneider Electric and UniCredit were among the biggest fallers on the Stoxx 50.

Losses on the FTSE 100, however, were softened somewhat by gains for oil majors BP and Shell.

With airline stocks weighed down by soaring fuel prices, Bernstein said Ryanair and IAG looked best-positioned to weather the storm , while Air France-KLM and Wizz Air seemed the most exposed.

Bernstein added that inflation could rise by 0.9 percentage points in 2026 if oil prices hit $130.

"Under those circumstances, the ECB would probably deem it necessary to tighten policy in order to avoid second round effects."

European natural-gas prices jumped again and have almost doubled since the start of the war.

Stocks to Watch

Roche fell after its breast-cancer drug giredestrant didn't meet the primary objective of a late-stage study. Vontobel reduced its target price for the drugmaker.

L'Oreal could be under pressure in the near term as sales trends continue to slow, Deutsche Bank said.

Leonardo's decision to team up with an international partner for its aerostructures unit is a major clean-up event, Barclays said, upgrading its rating and price target on the stock.

Hensoldt will benefit from air-defense demand being at all-time high levels, Jefferies said, raising its rating on the stock to buy from hold.

Economic Insight

Despite the recent rise in short-term market inflation expectations, Danske Bank said major central banks were unlikely to-and should not-react by hiking interest rates.

The bank said this is a classic negative supply shock beyond central banks' control, and longer-term inflation expectations remain anchored .

Most developed economies are net oil importers and will likely suffer from oil price shocks , BMI said.

Energy importers running current account deficits, such as Italy and Greece, are most vulnerable. Importers with current account surpluses, including Germany, are also exposed.

Exporters with current account surpluses such as Norway will benefit from higher energy prices, while Sweden and Ireland have greater fiscal and monetary space to absorb shocks.

U.S. Markets:

Stock futures were pointing to steep declines as worries deepened about prolonged disruption of energy supplies from the Middle East.

Treasury yields rose as inflation fears continued to surmount growth concerns.

Forex:

The dollar stayed elevated after reaching a three-month high overnight, supported by higher oil prices, a scaling back of expectations for Fed rate cuts and broad-based risk aversion resulting from the conflict.

The euro was lower against the dollar and is at risk of falling below $1.15 if energy prices remained elevated due to the Middle East conflict.

"The longer energy prices stay high, the greater the damage to the 2026 narrative of synchronized global growth and Europe playing catch-up with U.S. exceptionalism," ING said.

The Swiss franc traded near its highest level against the euro since 2015 as the growing Middle East conflict boosts the safe-haven asset.

The Norwegian krone stayed close to a two-and-a-half-year high against the euro hit overnight due to steep gains in oil prices resulting from the Middle East conflict.

Bonds:

Investors were selling Treasurys, extending last week's trend.

Barclays said bonds failed as safe havens last week as the Middle East war skewed the shock more toward inflation and wider budget deficits than slower growth in the U.S.

"With soft economic data taking a back seat, conflict duration is key."

Morgan Stanley said the two clearest signals in the Treasury market from the U.S.-Iran conflict are risk reduction and upside inflation risks taking precedence over downside risks to growth.

The 10-year Bund yield jumped to a 12-month high.

Investors are selling government bonds across the board amid a renewed spike in oil prices.

The 10-year gilt yield hit a six-month high.

Investors have lowered their expectations of interest-rate cuts from the Bank of England as inflation worries intensify.

Energy:

Oil prices surged to their highest level since mid-2022 as some major Gulf producers started cutting production, while the Strait of Hormuz remains effectively closed.

"The combination of these production shut-ins and no signs of de-escalation in the war means the market is having to aggressively price in a prolonged supply disruption," ING said. "Even if flows through the Strait of Hormuz start to resume, it will take time for upstream production to ramp up."

OCBC Group Research said an "acute" energy shock scenario could send Brent crude toward $140/bbl and keep it elevated through mid-2026.

"Our base case of oil sliding below USD70/bbl by mid-year is being undermined by tail risks reminiscent of the 2022 Russia-Ukraine energy shock."

Julius Baer said the surge in oil prices may still be short-lived .

"Meaningful infrastructure damage remains absent, and Iran's military threat seems to be softening."

Gas

European natural-gas prices extended last week's staggering gains as the war in the Middle East continued to roil energy markets, severely disrupting supplies

Even if the conflict were to end immediately, market experts say supply disruptions could last for months .

The disruption comes at a time when Western Europe is particularly vulnerable due to low gas storage levels, raising traders' concerns about the ability to replenish supplies ahead of next winter.

Metals:

Gold prices fell on fears that rising energy prices could stoke inflation and delay interest-rate cuts in the U.S.

A stronger dollar is also making dollar-denominated commodities more expensive for overseas buyers.

"In the short term, deleveraging and a stronger dollar may weigh on prices without removing the underlying reasons investors have increasingly been flocking to hard assets in recent years," Saxo Bank said.

Iron Ore

Prices rose, likely stemming from China's commitment to support the steel sector and curb excess capacity, according to Commonwealth Bank.

Lithium

Downgrades to forecast Middle East battery energy storage installations and electric-vehicle demand were creating a new headwind for lithium , weighing on spodumene futures prices.

EMEA HEADLINES

The Big Winner From the Persian Gulf Energy Crisis? Russia

Just over a week ago, Russia's energy industry was in its worst shape in years, with low oil prices and sanctions starving the economy of cash. Millions of barrels of Russian oil floated on the sea, much of it without a destination.

The war in the Persian Gulf has turned that dynamic on its head.

Germany's Industrial Rebound Stumbles as Orders, Production Fall

German manufacturing orders plunged at the start of 2026, while production also fell, indicating an uncertain outlook for the country's industrial sector despite the rollout of government stimulus.

Orders fell 11.1% in January compared with a jump of 6.4% a month prior, statistics agency Destatis said Monday. A consensus of economists polled by The Wall Street Journal had expected a smaller drop of 4.0%.

GSK Sells Rights to Drug Candidate to Alfasigma for Up to $690 Million

GSK said it would sell rights to linerixibat, an experimental treatment for itching caused by a liver disease, to Italian pharmaceutical company Alfasigma as part of a licensing agreement valued at up to $690 million.

The U.K. pharmaceutical company said it would receive $300 million upfront and be eligible to receive another $100 million upon approval for the drug in the U.S. and a further $290 million subject to achieving additional regulatory and sales-based targets. GSK said it would also earn double-digit percentage royalties on the drug's net sales.

Roche Shares Fall After Breast-Cancer Treatment Misses Goal in Late-Stage Study

Roche Holding shares fell after the company said a late-stage study for an experimental breast-cancer treatment missed its primary objective.

The results of the clinical trial mark a setback for the Swiss pharmaceutical company, which saw in the drug, giredestrant, a candidate to generate annual peak sales above 3 billion Swiss francs ($3.87 billion). The drugmaker, though, said there was still a path forward for the medicine.

Volkswagen Dealers Revolt Over Plan to Sell a New Brand of SUV Directly to Consumers

When the German automaker Volkswagen revealed it would create a brand called Scout Motors-with a lineup of rugged, all-American electric and hybrid trucks and SUVs-Fred Ippolito started making plans.

Ippolito, a Volkswagen dealer, bought a vacant retail lot next door to his dealership in West Islip, N.Y. The perfect place for a Scout store, he thought. The trucks, designed and built in the U.S. for American buyers, are exactly what Volkswagen dealers have spent years clamoring for.

GLOBAL NEWS

Oil, Gas Prices Surge as Iran War Forces Gulf Producers to Cut Output

Oil and gas prices surged Monday as the Middle East war roils energy markets, forcing major producers to shut down output while the Strait of Hormuz remains effectively closed.

In early European trading, Brent crude climbed 11% to $103.14 a barrel and West Texas Intermediate rose 8.9% to $89.49 a barrel, trimming earlier gains on news that Group of Seven ministers are set to discuss the joint release of petroleum reserves. The global benchmarks reached their highest levels since 2022 earlier in the session, touching $119.50 and $103.67 a barrel, respectively.

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March 09, 2026 07:08 ET (11:08 GMT)

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