Market Snapshot
| INDICATOR | LEVEL | MOVE |
|---|---|---|
| S&P 500 | ~6,877 | ▼ Near flat — crashed 1.2% at open, recovered on tech dip-buying; Nvidia +3%, Palantir +6.5% |
| Dow Jones | ~48,900 | ▼ −0.2% — fell 600 pts at low; Sherwin-Williams −4.2%, Nike −2.8%; Chevron +1.6% |
| Nasdaq | ~22,737 | ▲ +0.3% — recovered from −1.6% low; Nvidia +3%, Microsoft +1.4%; Apple −1% |
| WTI Crude | ~$73/bbl | ▲ +6% — Hormuz de facto closed; Wells Fargo warns $100 oil worst case; 52-week high |
| Brent Crude | ~$79/bbl | ▲ +9% — 52-week high; QatarEnergy LNG shutdown; 170 ships trapped in Hormuz |
| Gold | ~$5,388 | ▲ +2.7% — safe-haven bid; JPMorgan targets $6,300 by year-end 2026 |
| US Dollar Index | — | ▲ +1% — 5-week high; erased YTD losses; safe-haven flows |
| 10-Year Treasury | ~4.06% | Fell to 3.96% Sunday (lowest since Nov), rebounded Monday; ISM inflation complicates rate outlook |
Conflict Tracker
Fast Take
Developments to Watch
What happened: The US and Israeli joint military operation against Iran entered its third day on Monday. CENTCOM confirmed four US service members killed in action and five seriously wounded. Over 1,000 targets have been struck across Iran, with 600 infrastructure sites dismantled including ballistic missile facilities hit by B-2 stealth bombers.
Trump said the war would likely last 4–5 weeks but “could go far longer.” He laid out US objectives from the White House, saying this was America’s “last, best chance to strike.” Defence Secretary Hegseth said the operation would not be “endless.” Iran has established a three-person temporary leadership council after Khamenei’s confirmed death.
So what: The legal and political foundations of this war are being contested in real time. Senate Intelligence Vice Chair Warner said he saw “no intelligence” of an imminent Iranian attack — directly challenging the administration’s preemptive strike rationale. A war powers resolution is expected.
The operational tempo — 1,000+ targets in 72 hours — suggests a campaign designed to destroy Iran’s military infrastructure before Tehran can mount a coordinated response. But Iran’s retaliatory strikes across six Gulf states, plus Hezbollah opening the Lebanon front, demonstrate that Iran’s capacity for asymmetric escalation exceeds what a 4–5 week timeline might suggest.
The friendly fire incident — three US jets downed by Kuwaiti forces — underscores the fog-of-war risks in a multi-front, multi-nation battlespace.
What happened: The ISM manufacturing prices paid index surged to 70.5 in February, up from 59.0 in January — the highest reading since June 2022 when inflation was at its peak. The headline manufacturing PMI held at 52.4, the second consecutive month of expansion after 10 months of contraction.
Backlog orders jumped to the highest since May 2022. The imports index hit 54.9, highest since February 2022, reflecting companies front-loading purchases ahead of tariff increases. Manufacturers reported steel and aluminium as “the highest priced in the world, by far” due to Section 232 tariffs.
So what: This data landed on the worst possible day. The ISM prices paid surge was already a problem for the Fed — and then oil spiked 6–9% on the Iran war. Capital Economics warned this “will raise some eyebrows at the Fed” and the combination of tariff-driven goods inflation plus an energy shock makes rate cuts for 2026 increasingly unlikely.
The front-loading of imports is a rational response to Trump’s 15% global tariff, but it creates a temporary demand surge that further inflates prices. When the front-loading ends, the demand cliff could be sharp. The Fed is trapped: inflation argues for holding rates, while a potential war-driven economic slowdown argues for cutting them.
What happened: US equities opened sharply lower on Monday before staging a dramatic intraday recovery. The S&P 500 fell 1.2% at its lows before recovering to near flat. The Nasdaq dropped 1.6% before closing up 0.5%. The Dow fell roughly 600 points before recovering to about −0.2%.
Defence stocks surged: Lockheed Martin +6%, Northrop Grumman +5%, AeroVironment +10%. Oil stocks rallied: Exxon +4%, Chevron +4%, ConocoPhillips +5%. Tech rebounded: Nvidia +3%, Palantir +6.5%. Berkshire Hathaway fell 5% on disappointing Q4 earnings — insurance underwriting profits dropped 54% in Buffett’s final quarter as CEO.
So what: The market’s message is clear: Wall Street is betting on a short, contained war. Stocks historically recover quickly from geopolitical shocks, and the aggressive dip-buying in tech suggests investors view this as a buying opportunity rather than a regime change.
But Wells Fargo’s tail risk scenario — $100 oil pushing the S&P to 6,000, a 13% decline — shows where the risks are. Goldman Sachs warned the equity impact “will hinge less on headline risk and more on the durability of any energy shock.” If Hormuz stays closed beyond weeks, the calculus changes entirely.
What happened: Prime Minister Carney and Indian PM Modi announced a “new partnership” in New Delhi on March 2, setting a goal to more than double bilateral trade to C$70 billion by 2030. The two leaders committed to completing a free trade agreement (CEPA) by December 2026.
Deals signed include McCain Foods’ C$135 million Gujarat plant expansion. The two countries agreed to cooperate on fentanyl precursors and transnational crime — a significant diplomatic reset after Canada expelled Indian diplomats in 2023 over the Nijjar assassination allegations. Separately, China’s tariff suspensions on Canadian canola, peas and seafood took effect March 1.
So what: Carney is executing the most aggressive trade diversification in Canadian history. In under three months, he has secured a China canola deal, launched EU–CPTPP bridge talks, and now signed an India partnership with a December FTA deadline. Each deal reduces Canada’s dependence on the US market, which absorbs 75% of Canadian exports.
The India deal is particularly strategic. A market of 1.4 billion people, a Commonwealth partner, and a country that imports significant Canadian natural resources. The December FTA deadline is ambitious but signals real urgency. Modi’s willingness to engage so visibly — he rarely does press conferences — suggests India views Canada as a useful counterweight to both US and Chinese pressure.
What happened: North Carolina holds its primary election on March 3, the first major test of the 2026 midterm cycle. The marquee race is the open US Senate seat vacated by Thom Tillis, who chose not to seek re-election. Democrats have not won a North Carolina Senate race since 2008.
The Iran war became an instant campaign issue. In the NC-4 Democratic primary, challenger Nida Allam released a video condemning the war and criticising incumbent Rep. Valerie Foushee for accepting defence contractor donations. Foushee has also condemned the war and said she would support a war powers resolution.
So what: The timing is extraordinary. Voters go to the polls 72 hours after the US launched strikes on Iran. Whether the war energises anti-war progressives or rallies support behind the commander-in-chief will provide the first real data point for how the conflict reshapes the midterm landscape.
The open Tillis seat is a genuine swing race in a state Trump won by 3.2 points in 2024. Over 30 states hold primaries by June. The NC results will set the narrative template for every subsequent contest.
What happened: Airlines cancelled over 1,560 flights on Monday alone — 41% of scheduled arrivals to Middle East countries. Hundreds of thousands of passengers remain stranded across the Gulf. UAE halted financial market operations for two days. Dubai and Abu Dhabi airports began limited resumptions by Monday evening.
The UK estimates 300,000 British nationals are in the Gulf region. An AWS data centre in the UAE was struck by an Iranian retaliatory attack, causing connectivity disruptions. Eight Middle Eastern airspaces remain closed.
So what: The humanitarian and economic disruption extends well beyond the battlefield. An estimated several hundred thousand American tourists and business travellers are in the region. The consular and logistics challenge of evacuation, if required, would be massive.
The AWS data centre strike is a reminder that modern warfare targets digital infrastructure. Gulf states host significant portions of global cloud computing capacity. Prolonged disruption could affect businesses worldwide that route through Middle Eastern data centres.
Sovereign & Credit Pulse
| COUNTRY | DEVELOPMENT | OUTLOOK |
|---|---|---|
| United States | Operation Epic Fury day 3; 4 KIA; ISM prices paid 70.5 (3-year high); S&P recovered from −1.2%; 10-yr yield 4.06% | War + tariff inflation + oil shock = Fed paralysis; rate cuts off table; fiscal costs of military campaign mounting |
| Canada | Carney–Modi India deal; C$70B trade target by 2030; CEPA by December; China tariff suspensions from March 1 | Most aggressive trade diversification in history; 25% US tariffs driving strategic realignment to India, China, EU |
| Iran | Khamenei dead; 555+ killed; temporary 3-person council; retaliating across 6 Gulf states; IRGC commander killed | Decapitated leadership; internet at 4% of normal; but retaliatory capacity undiminished; succession crisis looming |
| Israel | Joint operation with US; 1,200 munitions across 24 of 31 Iranian provinces; Hezbollah front opens in Lebanon; 11 killed in Israel | Multi-front war; Gaza crossings closed; two-front escalation risk; strategic window to degrade Iranian capability |
| Gulf States | UAE markets shut 2 days; AWS data centre struck; Bahrain 5th Fleet targeted; Qatar shoots down 2 Su-24s; airports disrupted | Collateral damage zone; economic disruption acute; hundreds of thousands of travellers stranded; infrastructure targeted |
Power Players
| NAME | ROLE | SIGNIFICANCE |
|---|---|---|
| Donald Trump | President, United States | Launched Operation Epic Fury; 4–5 week war timeline; absent from public 48 hours; “last, best chance to strike”; claims Iran’s new leadership wants talks |
| Pete Hegseth | Secretary of Defense, US | Says war “not endless”; Iran “cannot have nuclear weapons”; overseeing largest US military operation since Iraq |
| Mark Warner | Vice Chair, Senate Intelligence Committee | Says he saw “no intelligence” of imminent Iranian strike; challenges preemptive war rationale; war powers resolution expected |
| Mark Carney | Prime Minister, Canada | Signs India trade partnership; C$70B target by 2030; CEPA by December; China deal delivering canola relief; EU–CPTPP bridge talks; 70% domestic defence contracts |
| Jamie Dimon | CEO, JPMorgan Chase | Warns of cyber and terror attacks in retaliation for Iran strikes; previously warned AI euphoria and “dumb things” by banks could trigger crisis |
Regulatory Watch
| JURISDICTION | MEASURE | STATUS |
|---|---|---|
| US Congress | War powers resolution expected to limit Trump’s military authority in Iran; bipartisan concern over preemptive strike rationale | Expected this week; Senate Intel Vice Chair Warner challenges intelligence basis |
| US – Global | 15% blanket global tariff effective; Section 232 steel/aluminium tariffs driving ISM prices paid to 70.5; GM warns $3–4B tariff costs | US House voted against Canada tariffs (vetoed by Trump); CUSMA tensions escalating |
| Canada – India | CEPA (free trade agreement) targeted by December 2026; bilateral trade to C$70B by 2030; security cooperation on fentanyl precursors | Announced March 2; negotiations to begin immediately; diplomatic reset from 2023 expulsions |
| Canada – China | Canola seed tariffs cut 85% → 15%; canola meal, peas, lobster tariffs suspended; 49,000 Chinese EV imports at 6.1% tariff | Effective March 1; through end of 2026; Carney says no FTA with China planned; export orders unlocking ~C$3B |
Calendar
| DATE | EVENT | SIGNIFICANCE |
|---|---|---|
| Mar 3 | North Carolina primary election | First 2026 midterm test; open Tillis Senate seat; 14 House races; Iran war as campaign issue |
| Mar 6 | US February jobs report (nonfarm payrolls) | Critical for Fed rate calculus; ISM employment contracted; tariff and war effects not yet reflected |
| This week | Congressional war powers debate | Resolution expected; bipartisan concern; Warner intelligence challenge; legal authority disputed |
| Ongoing | Operation Epic Fury | Trump projects 4–5 weeks; duration determines oil price, inflation, Fed path, midterm impact |
| Dec 2026 | Canada–India CEPA target | Free trade agreement deadline; C$70B bilateral trade target by 2030; biggest Canadian trade pivot since CUSMA |
| Nov 3 | 2026 midterm elections | All 435 House seats + 34 Senate seats; Iran war, inflation, tariffs shape national debate |
Bottom Line
The United States is at war. Four American service members are dead. The president says the campaign will last four to five weeks. The senior Democrat on the intelligence committee says there was no evidence of an imminent threat. Wall Street plunged 1.2% at the open, then bought the dip. These facts do not cohere easily, and the market’s attempt to reconcile them will define the weeks ahead.
The ISM report that landed on Monday morning would have been the lead story any other day. Prices paid at 70.5 — the highest since the inflation peak of 2022 — driven by tariff-inflated steel and aluminium costs. Then oil spiked 6–9% on the Iran war. The Fed, which markets had hoped might cut rates this year, is now contending with a dual inflation shock: tariff-driven goods prices and energy costs it cannot control.
Wall Street’s intraday recovery tells a story of institutional confidence that this will be short. Investors piled into Nvidia and Palantir — cash-rich companies that survive any environment — and sold travel, banking and consumer discretionary. The market is making a bet: that this war ends on Trump’s 4–5 week timeline, that oil retreats, and that the damage is contained. If it is wrong, Wells Fargo’s $100 oil, S&P 6,000 scenario becomes the playbook.
Across the border, Mark Carney is building a different future. His India deal on March 2 — C$70 billion trade target, FTA by December, fentanyl cooperation, McCain Foods investment — is the latest move in the most ambitious Canadian trade diversification since Confederation. In eight weeks, Carney has signed deals with China, launched bridge talks between the EU and CPTPP, and now reset relations with India after the 2023 diplomatic rupture. Each deal reduces Canada’s exposure to the 25% US tariff wall that Trump shows no interest in removing.
The political fallout is starting. North Carolina votes tomorrow in the first primary of the 2026 midterm cycle, 72 hours after the strikes began. Whether the open Tillis Senate seat goes to a candidate who made the war a campaign issue — or one who rallied behind the commander-in-chief — will provide the first data on how Americans process a new Middle Eastern conflict. The anti-war energy visible in the NC-4 Democratic primary mirrors the dynamics that reshaped the 2006 midterms during Iraq.
Jamie Dimon’s warning about cyber and terror retaliation is the quiet alert beneath the headlines. The AWS data centre strike in the UAE demonstrated that Iran targets digital infrastructure. If Tehran or its proxies shift to asymmetric attacks on American financial or technology systems, the market recovery that held on Monday will not hold on Tuesday.
The operational tempo in Iran suggests Washington wants this finished before the consequences compound. Over 1,000 targets in 72 hours is designed to break the regime’s military capacity before the economic and political costs at home become untenable. The question is whether Iran — decapitated but still firing missiles at six countries — cooperates with that timeline. Wars are easy to start. Every general knows that. The hard part is the part that comes next.