Market Update – March 2nd, 2026
Markets opened this morning absorbing the geopolitical shock of the U.S. and Israel launching extensive aerial strikes on Iran overnight on Saturday, February 28th. This action represented a major escalation in longstanding Middle East tensions and immediately heightened global risk awareness.
Volatility spiked across global markets, with particular focus on energy given the region’s critical role in the global supply chain. Investor concern centers on potential supply disruptions and the broader economic implications should tensions persist.
The CBOE Volatility Index (VIX) rose to 25.24, up from Friday’s close of 19.85 and marking its highest intraday level of the year. The VIX closed up +7.4% on the day indicating heighted caution. The S&P 500 initially fell more than 1% at the open, while the Dow Jones Industrial Average dropped by over 500 points. However, the early weakness was met with buying interest, and markets stabilized throughout the day, led by strength in the Technology sector. The S&P 500 finished essentially flat on the day.1
International equities were broadly lower. The Euro Stoxx 50 Index finished down 2.46% on the day. Asian markets were also weaker, with Japan’s Nikkei 225 declining 1.35% and South Korea’s KOSPI Index falling approximately 1%.2
Safe-haven assets have had mixed reactions. The US dollar strengthened +0.97% vs. a trade-weighted basket of global currencies and Gold rallied +1.4%. However, U.S. Treasury yields reversed their initial flight-to-safety move, with the 10-year yield ultimately closing at 4.05%.3
The move higher in yields suggests markets are pricing in higher inflation expectations, driven largely by higher energy prices. When geopolitical shocks ripple through the energy channel, the market must weigh the immediate risk-off response against the longer-term impact on inflation expectations and the downstream effects across the economy.
The Russian invasion of Ukraine in 2022 provides a relevant historical parallel. At that time, energy and agriculture price shocks stoked already intense inflationary pressures, which pushed bond yields higher, and ultimately contributed to more aggressive Federal Reserve tightening. Today’s backdrop is different, as inflation is well below its 2022 peak; however, recent events reintroduce an inflation risk that had largely subsided.
Focusing on the Energy markets, geopolitical events like this have historically led to an increase in oil prices due to the threat of physical disruption within the supply chain. Brent Crude Oil surged +8.8% to over $79/barrel, the highest level since January 2025. In US markets, the Energy sector was the best performing sector on the day, rising +2% as beneficiaries of higher commodity prices.4
The focal point to watch is the Strait of Hormuz, a narrow shipping corridor through which roughly 20% of global oil shipments transit. Iran controls the northern side of the strait and has the capacity to disrupt shipping flows temporarily. While a sustained blockade is unlikely given the significant global military presence in the region, even short-term disruptions can elevate prices and volatility.
Going forward, we will continue to monitor developments with three key factors for investors standing out:
- Duration and scope of the military escalation in the region and potential stability when the conflict is resolved.
- Impacts on the energy supply chain.
- The reaction of central banks if inflation expectations re-accelerate.
While the headlines are significant and understandably unsettling, our focus remains on the underlying fundamentals including earnings, interest rates and the broader economic trajectory.
Geopolitical events often trigger sharp, immediate reactions, but those moves are frequently short-lived unless they materially change economic conditions. Today’s market action reflected that pattern, with early volatility giving way to greater stability. Historically, equity markets have demonstrated resilience through periods of geopolitical stress:
Long-term investment success is rarely driven by reacting to short-term turbulence. It is built on disciplined portfolio construction, thoughtful risk management, and alignment with your long-term goals. Environments like this underscore the importance of a portfolio designed to endure short-term uncertainty while staying firmly aligned with long-term goals.
As always, if you have questions, please don’t hesitate to reach out.
Footnotes:
- Koyfin Market Data https://app.koyfin.com/home
- Koyfin Market Data https://app.koyfin.com/home
- Koyfin Market Data https://app.koyfin.com/home
- Koyfin Market Data https://app.koyfin.com/home
The views expressed herein are those of John Nagle on March 2nd, 2026 and are subject to change at any time based on market or other conditions, as are statements of financial market trends, which are based on current market conditions. This market commentary is a publication of Kavar Capital Partners (KCP) and is provided as a service to clients and friends of KCP solely for their own use and information. The information provided is for general informational purposes only and should not be considered an individualized recommendation of any particular security, strategy or investment product, and should not be construed as investment, legal or tax advice. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s investment portfolio. All investment strategies have the potential for profit or loss and past performance does not ensure future results. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The charts and graphs presented do not represent the performance of KCP or any of its advisory clients. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results. There can be no assurances that a client’s portfolio will match or outperform any particular benchmark. KCP makes no warranties with regard to the information or results obtained by its use and disclaims any liability arising out of your use of, or reliance on, the information. The information is subject to change and, although based on information that KCP considers reliable, it is not guaranteed as to accuracy or completeness. This information may become outdated and KCP is not obligated to update any information or opinions contained herein. Articles herein may not necessarily reflect the investment position or the strategies of KCP. KCP is registered as an investment adviser and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.