Market Update – March 2, 2026
Geopolitical risk reemerged over the weekend with the joint military attack on Iran by the United States and Israel. Market concerns are centered around the disruption to energy production and shipment given Iran’s retaliatory strikes on energy infrastructure assets in the region and threats to shut down the Strait of Hormuz.
So far, the reaction of US equities has been rather muted. Interest rates have moved higher on the possible inflationary risk of an oil spike, while credit spreads have remained largely unchanged. Both gold and the US dollar have moved higher.
Historically, geopolitical events have not generated sustained periods of equity volatility. This was evident as recently as last June with Israel’s previous attack on Iranian nuclear facilities and Iran’s subsequent missile barrage. The duration of the conflict and its impact on the flow of both oil and capital from the Gulf will be key in assessing any future risk to capital markets and the economy.
The situation is incredibly fluid, and Madison’s investment teams continue to monitor the developments closely.