Strategist says expect equities to take a hit and crude and gold to gain
A plume of smoke rises following a reported explosion in Tehran on Feb. 28, 2026. Two loud blasts were heard in Tehran on Feb. 28 morning by AFP journalists, and two plumes of thick smoke were seen over the center and east of the Iranian capital.
Investors roiled for weeks by AI disruption and then hotter-than-expected inflation on Friday faced a fresh level of stress after the U.S. and Israel launched attacks on Iran to destabilize its nuclear ambitions.
“A short time ago, the United States military began major combat operations in Iran. Our objective is to defend the American people by eliminating imminent threats from the Iranian regime, a vicious group of very hard, terrible people,” President Donald Trump said in a video message published on his Truth Social account early Saturday.
Cryptocurrencies, which trade 24/7, offered the first glimpse of how investors might react, as they wait for Asian markets to open on Sunday. Bitcoin (BTCUSD) slid 3.1% to $63,561, a level not seen since early February. Oil (CL.1) (BRN00) prices jumped on Friday as traders began to sense strikes could be nearing, with Trump suggesting to reporters that the window for diplomacy with Iran could be closing.
“At this stage there are many unknowns, and the situation is incredibly fast moving. The damage done by U.S.-Israeli strikes, and the targets of those strikes, is not yet clear; nor is the impact of any Iranian retaliatory action,” said Michael Brown, senior research strategist at Pepperstone, in a note to clients. “In addition, the precise scope of the action, nor mission aims, are obvious at this stage. Furthermore, it is not known whether any crude infrastructure has been targeted, or impacted, at the present time.”
Apart from surging oil prices on Friday, the S&P 500 SPX and Nasdaq Composite COMP and Dow industrials DJIA tumbled after a surprise spike in producer prices.
Brown said investors could see a “relatively predictable” reaction to the strikes on Iran, starting with a big leap in crude prices. Also likely to get bid are haven assets, such as gold (GC00), which jumped nearly 11% in February, finishing at $5,230.50 an ounce on Friday. That marked gold’s biggest one-month percentage gain since January 2012, and its monthly gain of $516.60 was the biggest one-month net gain on record, according to Dow Jones Market Data.
Brown said the Japanese yen (USDJPY), Swiss franc (USDCHF) and U.S. Treasurys BX:TMUBMUSD10Y BX:TMUBMUSD30Ywould also likely be in the outperformer category. Investors have been increasingly pushing into U.S. government debt recently, a move strategists have attributed to fears over AI threats to employment and economic growth.
Read: The bond market has been doing something strange despite a hot inflation report
While equities will likely “face headwinds,” Brown said investors should remember that “geopolitical events tend not to be a trigger for durable or longer-lasting market moves in any asset. Of course, there’s a risk that this time could be different, however it is unlikely to be the case once participants have discounted the initial shock triggered by this weekend’s events.”
Trump last week offered a deadline of 10 to 15 days to make a deal with Iran, which left this weekend as a possibility for a U.S. strike. Iran has been one of the world’s biggest oil producers, controlling to several crucial “chokepoints,” such as the Strait of Hormuz. That waterway connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
In his social-media post, Trump did not indicate how long the strikes would last. The Associated Press reported a daylight Saturday attack on Tehran, with initial blasts hitting near the offices of Supreme Leader Ayatollah Ali Khamenei.
He said after the U.S. launched strikes on three Iranian nuclear sites last June, Iran was warned never to resume its pursuit of nuclear weapons and the U.S. “sought repeatedly to make a deal.”
“They rejected every opportunity to renounce their nuclear ambitions and we can’t take it anymore. Instead they attempted to rebuild their nuclear program and continue developing long-range missiles that can now threaten our very good friends and allies in Europe and could soon reach the American homeland,” Trump said in his address.
“It has always been the policy of the United States, in particular, my administration, that this terrorist regime can never have a nuclear weapon,” he said, recounting “an unending campaign of bloodshed and mass murder” against the U.S. over 47 years, as well as attacks on Israel.
“We’re going to destroy their missiles and raze their missile industry to the ground. It will be totally, again, obliterated. We’re going to annihilate their navy, we’re going to ensure that the region’s terrorist proxies can no longer destabilize the region or the world and attack our forces,” he said.
Addressing the people of Iran – thousands of protesters were killed during protests at the start of the year – Trump also said the U.S. was giving them their “only chance for generations” to rise up against their government. He advised citizens in Iran to stay sheltered as “bombs will be dropping everywhere,” but after that they would have that opportunity.
“Now is the time to seize control of your destiny,” he said.
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