Futures drop, oil spikes amid widening Mideast conflict

1. Futures Slump U.S. stock futures sank sharply on Monday, as traders braced for the fallout from U.S. and Israeli attacks against Iran that have threatened to spill into a conflict engulfing the wider Middle East region. By 02:54 ET (07:54 GMT), the Dow futures contract had shed 733 points, or 1.5%, S&P 500 futures had dropped by 104 points, or 1.5%, and Nasdaq 100 futures had slumped by 463 points, or 1.9%. On Saturday, the U.S. and Israel carried out joint strikes on sites across Iran, which resulted in the killing of several high-ranking Iranian personnel, including Supreme Leader Ayatollah Ali Khamenei. U.S. President Donald Trump has urged Iranian opposition to topple the nation’s longstanding repressive government system, although many senior U.S. officials remain skeptical that a regime change is impending, Reuters has reported. Uncertainty has particularly surrounded how long Washington plans to remain involved in the conflict. Trump told the New York Times that the assault could be sustained for "four to five weeks." He also declined to provide specific details on how he foresees a transition in Iran transpiring, saying he has "three very good choices" to lead the country but "won’t be revealing them now," the New York Times reported. The attacks provoked retaliatory actions from Tehran on locations around the Middle East, with energy-producing Gulf nations among the targets. Three U.S. servicemembers were killed and five seriously wounded, according to media reports citing U.S. Central Command, while Trump has warned of potentially more American casualties. In a sign that the conflict is widening outside of Iran, Israel struck Tehran-backed Hezbollah targets in Lebanon. The Wall Street Journal also reported that at least one American aircraft has been downed in Kuwait. 2. Oil Prices Spike Amid Iran Conflict Oil prices have skyrocketed in the wake of the attacks, reflecting worries that Iran may move to close down the Strait of Hormuz, a crucial waterway through which roughly a fifth of global oil supplies and 20% of worldwide liquefied natural gas flow. At 03:24 ET, Brent crude futures had surged by 10% to $80.14 a barrel and U.S. West Texas Intermediate crude futures had spiked by 9.3% to $73.26 per barrel. Reuters reported that even though the Strait of Hormuz has yet to be formally blocked by Tehran, marine tracking sites indicate that tankers, fearful of an attack or unable to access insurance for the voyage, are beginning to pile up on either side of it. Crucially, a substantial increase in oil prices could imperil the global economy, putting renewed upward pressure on inflation that may weigh on demand from already cost-conscious consumers. Should the conflict drag on for an extended period of time, prices for gasoline, electricity and more could climb. "How sustained any spikes are depends on how long attacks persist," analysts at ING said in a note to clients. "While it is still very early days and the situation is developing at a fast pace, it does not appear that this military action will be quick and short-lived," like previous U.S.-Israeli attacks on Iran last year, they added. Still, analysts quoted by the New York Times have suggested that, even with the spike, oil prices remain within historical levels. A long-running supply glut is seen helping temporarily mitigate some of the impact of the oil price increase as well, a trend further bolstered by the OPEC+ producer group’s announcement on Sunday that it plans to raise output modestly next month. 3. Gold Surges Gold prices jumped as investors rushed into safe-haven assets in the midst of the attacks. Spot gold rose 2.3% to $5,402.31 an ounce by 03:44 ET. U.S. Gold Futures climbed 3.3% to $5,418.09. "A regional spillover or disruption to energy supplies would materially boost gold through higher oil prices, increased inflation expectations and contained real yields," the ING analysts said. Away from geopolitics, a busy week of economic data and earnings awaited investors. Along with the February U.S. jobs report, returns from Broadcom and Target are due out during the first week of March. 4. Asian Stocks Tumble Meanwhile, Asian stocks fell sharply. Regional markets took a weak lead-in from Wall Street’s Friday session, as uncertainty over artificial intelligence and interest rates dented U.S. stocks. Hong Kong’s Hang Seng index and Japan’s Nikkei 225 were among the worst performers in Asia, sliding 2.1% and 1.4%, respectively. In addition to geopolitical jitters, Asian markets were also hit by losses in technology shares, as investors remained uncertain over the impact of AI on the sector. Software stocks in particular were nursing deep losses in February on concern over heightened competition from AI tools. 5. Berkshire Hathaway’s Fourth-Quarter Profit Slips Berkshire Hathaway reported nearly a 30% fall in fourth-quarter operating profit compared to a year earlier, dragged down by insurance underwriting. In Warren Buffett’s last quarter as chief executive officer, operating earnings from insurance underwriting more than halved to $1.56 billion from a year earlier, while insurance investment income was down nearly 25% to $3.07 billion. The company also recorded $4.5 billion in impairment charges tied to its investments in Kraft Heinz and Occidental Petroleum Corporation. Operating earnings stood at $10.2 billion for the quarter ended December 31, versus nearly $14.53 billion from a year earlier. The results on Saturday included the first letter to shareholders from Greg Abel, Buffett’s hand-picked successor at the investment conglomerate. Abel noted that Buffett, who has become one of the world’s most prominent investors and was known for peppering his shareholder letters with nuggets of market wisdom, was "obviously a hard act to follow."

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Futures drop, oil spikes amid widening Mideast conflict - what’s moving markets