Dow Futures indicate substantial declines in response to the initiation of extensive airstrikes on Iran by the U.S. and Israel. The strikes elevate oil prices and catalyze a wider movement away from risk assets and towards safe-haven investments, particularly gold. Equities in Asia experienced a decline, influenced by ambiguity regarding the implications of advancements in artificial intelligence on the technology sector.

Dow Futures experienced a significant decline on Monday, as market participants prepared for the repercussions of U.S. and Israeli military actions against Iran, which have the potential to escalate into a broader conflict affecting the entire Middle East region. By 02:54, the Dow futures contract had declined by 733 points, representing a decrease of 1.5%. Additionally, futures had fallen by 104 points, also a 1.5% drop, while another set of futures had decreased by 463 points, equating to a 1.9% slump. On Saturday, the United States and Israel executed coordinated strikes on various locations in Iran, leading to the deaths of multiple senior Iranian officials, including Supreme Leader Ayatollah Ali Khamenei. U.S. President Donald Trump has called on Iranian opposition to overthrow the country’s enduring repressive government system. However, numerous senior U.S. officials express skepticism regarding the likelihood of imminent regime change, as reported. Uncertainty has notably enveloped the duration of Washington’s intended engagement in the conflict. Trump indicated that the assault could be sustained for “four to five weeks.” He also refrained from offering specific insights into how he envisions a transition in Iran unfolding, stating that he has “three very good choices” to lead the country but “won’t be revealing them now,” according to reports. The attacks elicited retaliatory measures from Tehran directed at various sites throughout the Middle East, notably including energy-producing Gulf nations among the targets. According to media reports referencing U.S. Central Command, three U.S. servicemembers have lost their lives and five others have sustained serious injuries, while Trump has cautioned about the possibility of additional American casualties. In a development indicating the expansion of the conflict beyond Iran’s borders, Israel targeted Hezbollah positions in Lebanon that are supported by Tehran. Reports indicate that at least one American aircraft has been downed in Kuwait.

Oil prices have surged following the attacks, indicating concerns that Iran might attempt to shut down the Strait of Hormuz, an essential passage for approximately one-fifth of global oil supplies and 20% of international liquefied natural gas shipments. At 03:24, Brent crude futures experienced a notable increase of 10%, reaching $80.14 per barrel, while U.S. West Texas Intermediate crude futures saw a rise of 9.3%, climbing to $73.26 per barrel. Reports indicate that while the Strait of Hormuz has not been officially obstructed by Tehran, marine tracking data suggests that tankers, concerned about potential attacks or facing difficulties in securing insurance for their journeys, are starting to accumulate on both sides of the strait. Importantly, a significant rise in oil prices could jeopardize the global economy, exerting renewed upward pressure on inflation that may dampen demand from consumers who are already mindful of costs. If the conflict persists over an extended duration, we may observe an increase in prices for gasoline, electricity, and other commodities. “The duration of any sustained spikes is contingent upon the persistence of attacks,” analysts noted in a communication 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,” they added, in contrast to previous U.S.-Israeli attacks on Iran last year. Nevertheless, analysts have indicated that, despite the recent surge, oil prices continue to align with historical averages. 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.

Gold prices surged as investors flocked to safe-haven assets amid the ongoing attacks. Spot gold increased by 2.3%, reaching $5,402.31 per ounce as of 03:44. U.S. Gold Futures experienced an increase of 3.3%, reaching a value of $5,418.09. Analysts indicated that a regional spillover or disruption to energy supplies would significantly elevate gold prices due to rising oil prices, heightened inflation expectations, and restrained real yields. Outside the realm of geopolitics, investors were poised for a week filled with significant economic data and earnings reports. In conjunction with the February U.S. jobs report, earnings results from Broadcom and Target are anticipated in the initial week of March.

In the interim, there was a notable decline in Asian stock markets. Regional markets took a weak lead-in from market’s Friday session, as uncertainty over artificial intelligence and interest rates dented U.S. stocks. Hong Kong’s index and Japan’s exhibited significant declines, with decreases of 2.1% and 1.4%, respectively, marking them as some of the poorest performers in the Asian market. Alongside geopolitical concerns, Asian markets experienced declines in technology shares, as investor sentiment remained cautious regarding the implications of AI on the industry. In February, software stocks experienced significant declines due to concerns regarding increased competition from AI tools.

Berkshire Hathaway disclosed a decline of nearly 30% in fourth-quarter operating profit relative to the previous year, primarily influenced by challenges in insurance underwriting. In Warren Buffett’s final quarter as chief executive officer, operating earnings from insurance-underwriting declined significantly to $1.56 billion compared to the previous year, while insurance-investment income experienced a nearly 25% decrease, totaling $3.07 billion. The company also reported impairment charges amounting to $4.5 billion associated with its investments in Kraft Heinz and Occidental Petroleum Corporation. Operating earnings were recorded at $10.2 billion for the quarter ending December 31, compared to approximately $14.53 billion in the same period last year. The results on Saturday featured the inaugural letter to shareholders from Greg Abel, the successor chosen by Buffett at the investment conglomerate. Abel remarked that Buffett, recognized as one of the globe’s leading investors and famed for infusing his shareholder letters with insights on the market, was “obviously a hard act to follow.”