Category: Market Summary

Shares of luxury goods companies moved lower on Monday after Morgan Stanley analysts warned that escalating conflict involving Iran could weigh on consumer spending sentiment across the Middle East.

In Paris, shares of Louis Vuitton owner LVMH (EU:MC) fell more than 3%, while Gucci parent Kering (EU:KER) dropped 4.3%. Switzerland-listed Richemont (TG:RITN) declined over 6%, and UK luxury brand Burberry (LSE:BRBY) lost around 4%. Sports car maker Ferrari (BIT:RACE) also slipped 3.8% in U.S. premarket trading.

In a research note, Morgan Stanley analysts estimated that the Middle East accounts for roughly 5% of total sales for most luxury companies, with the United Arab Emirates representing the largest individual market within the region.

They added that spending in the Middle East typically accelerates toward the latter part of the Ramadan holy month, particularly in the run-up to Eid al-Fitr, which this year falls on March 19 and 20. However, the recent outbreak of violence could dampen luxury purchases during this key seasonal period — often referred to as the “Ramadan rush” — according to analysts including Natasha Bonnet and Edouard Aubin.

On Saturday, the United States and Israel announced coordinated strikes targeting multiple locations in Iran, resulting in the deaths of several senior Iranian officials, including Supreme Leader Ayatollah Ali Khamenei. U.S. President Donald Trump called on Iranian opposition groups to overthrow the country’s long-standing political system, although many senior U.S. officials remain doubtful that regime change is imminent, Reuters reported.

Questions also remain over how long Washington intends to remain involved in the conflict. Trump told the New York Times that military operations could continue for “four to five weeks.” He also declined to outline how a political transition in Iran might unfold, saying he has “three very good choices” but “won’t be revealing them now,” according to the New York Times.

The strikes prompted retaliatory actions by Tehran targeting locations across the Middle East, including several energy-producing Gulf nations.

Shares in BAE Systems PLC (LSE:BAE) climbed 5.5% on Monday following heightened tensions in the Middle East over the weekend, with JPMorgan analysts identifying the UK defence contractor as one of the companies best positioned to benefit from a potential increase in U.S. defence spending.

In a research note, JPMorgan said the European defence sector could see further gains amid ongoing geopolitical conflicts and expectations of higher military budgets in the United States.

The bank highlighted comments from President Trump in January 2026 indicating plans to raise the U.S. defence budget by as much as 50% in fiscal 2027, although JPMorgan considers a rise of around 20–30% to be a more realistic scenario.

Analysts said the accelerating pace of U.S. military operations during 2026 is increasing pressure on policymakers to boost defence expenditure. BAE Systems derives roughly 44% of its revenue from the U.S. defence market — the highest exposure among European defence companies covered by JPMorgan.

JPMorgan also pointed to the need for the United States to replenish missile inventories following recent military activity. Media reports from June 2025 suggested the U.S. deployed between 15% and 25% of its total THAAD interceptor stockpile during a 12-day conflict, using approximately 100 to 150 interceptors from an estimated inventory of around 650 units.

BAE Systems supplies the infrared seeker component used in the THAAD missile guidance system, with JPMorgan estimating the company generates about $1 million in revenue per THAAD unit.

Other UK-listed defence companies also traded higher on Monday. Babcock International Group PLC (LSE:BAB) rose 0.9%, while Qinetiq Group PLC (LSE:QQ.) gained roughly 3% as of 11:00 GMT.

JPMorgan additionally highlighted several European defence firms with meaningful exposure to the U.S. market, including RENK Group AG (TG:R3NK) with around 25% exposure, Leonardo SpA (BIT:LDO) at approximately 23%, and Qinetiq Group PLC at about 18%.

U.S. equity futures signalled sharp declines after large-scale airstrikes by the United States and Israel against Iran heightened fears of a broader regional conflict. The escalation sent oil prices higher and prompted investors to shift away from risk assets toward traditional safe havens such as gold. Asian equities also moved lower, pressured by uncertainty surrounding artificial intelligence developments and their potential impact on the technology sector.

Futures fall sharply

U.S. stock futures dropped significantly on Monday as markets reacted to the joint U.S.-Israeli attacks on Iran and growing concerns that hostilities could spread across the wider Middle East.

At 02:54 ET, Dow futures were down 733 points, or 1.5%, S&P 500 futures had fallen 104 points, also 1.5%, and Nasdaq 100 futures declined 463 points, or 1.9%.

The coordinated strikes carried out on Saturday targeted multiple Iranian locations and reportedly killed several senior Iranian figures, including Supreme Leader Ayatollah Ali Khamenei. U.S. President Donald Trump urged Iranian opposition groups to challenge the country’s long-standing governing system, although many senior U.S. officials remain doubtful that regime change is imminent, according to Reuters.

Uncertainty remains over how long Washington intends to stay militarily engaged. Trump told the New York Times that operations could continue for “four to five weeks.” He also declined to outline a detailed plan for political transition in Iran, saying he has “three very good choices” to lead the country but “won’t be revealing them now,” the New York Times reported.

Iran responded with retaliatory strikes targeting locations across the Middle East, including energy-producing Gulf states. Media reports citing U.S. Central Command said three American service members were killed and five seriously injured, while Trump warned that additional casualties could follow.

Indications that the conflict may be expanding emerged as Israel struck Hezbollah targets in Lebanon. The Wall Street Journal also reported that at least one U.S. aircraft had been downed in Kuwait.

Oil surges on supply disruption fears

Oil markets rallied strongly following the escalation, as traders weighed the possibility that Iran could attempt to block the Strait of Hormuz — a critical shipping route responsible for roughly one-fifth of global oil supply and about 20% of worldwide liquefied natural gas flows.

By 03:24 ET, Brent crude futures had jumped 10% to $80.14 per barrel, while U.S. West Texas Intermediate crude futures climbed 9.3% to $73.26 per barrel.

Although Tehran has not officially closed the strait, Reuters reported that maritime tracking data shows tankers beginning to accumulate on both sides as operators grow concerned about potential attacks or face difficulties securing insurance coverage.

A sustained increase in oil prices could pose risks to the global economy by reigniting inflation pressures and weighing on consumer demand. If the conflict continues for an extended period, costs for fuel, electricity and other energy-related goods may rise further.

“How sustained any spikes are depends on how long attacks persist,” analysts at ING said in a note 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,” like previous U.S.-Israeli attacks on Iran last year, they added.

Some analysts cited by the New York Times noted that, despite the surge, oil prices remain within historical ranges. A prolonged global supply surplus could help cushion the impact, further supported by OPEC+ plans announced Sunday to modestly increase production next month.

Gold gains as investors seek safety

Gold prices rose as investors moved funds into safe-haven assets amid escalating geopolitical risk.

Spot gold advanced 2.3% to $5,402.31 per ounce by 03:44 ET, while U.S. gold futures climbed 3.3% to $5,418.09.

“A regional spillover or disruption to energy supplies would materially boost gold through higher oil prices, increased inflation expectations and contained real yields,” the ING analysts said.

Beyond geopolitical developments, investors are also preparing for a busy week of economic data releases and corporate earnings. The February U.S. jobs report is due alongside results from Broadcom and Target during the first week of March.

Asian markets decline

Asian equities also fell, following a weaker close on Wall Street on Friday as concerns over artificial intelligence developments and interest rate expectations weighed on technology shares.

Hong Kong’s Hang Seng index and Japan’s Nikkei 225 were among the region’s biggest decliners, dropping 2.1% and 1.4%, respectively.

Alongside geopolitical concerns, technology stocks faced additional selling pressure amid uncertainty about how AI advancements may reshape competition within the sector. Software companies in particular experienced notable losses in February due to fears of increased competition from AI-driven tools.

Berkshire Hathaway earnings fall

Berkshire Hathaway (NYSE:BRK.B) reported on Saturday that fourth-quarter operating profit declined nearly 30% year over year, primarily due to weaker insurance underwriting performance.

In Warren Buffett’s final quarter as chief executive officer, insurance underwriting earnings more than halved to $1.56 billion, while insurance investment income dropped nearly 25% to $3.07 billion.

The conglomerate also recorded $4.5 billion in impairment charges linked to its investments in Kraft Heinz (NASDAQ:KHC) and Occidental Petroleum Corporation (NYSE:OXY).

Operating earnings totaled $10.2 billion for the quarter ended December 31, compared with nearly $14.53 billion a year earlier.

The results included the first shareholder letter written by Greg Abel, Buffett’s chosen successor, who acknowledged that Buffett was “obviously a hard act to follow.”

U.S. equity futures indicated a sharply negative start to Friday’s trading session, pointing to a continuation of the pullback seen the day before.

Contracts moved deeper into the red after fresh inflation figures showed U.S. producer prices increased more than forecast in January, adding to concerns about persistent price pressures.

Data from the Labor Department showed the producer price index for final demand rose 0.5% in January, following a downwardly revised 0.4% gain in December.

Economists had anticipated a smaller 0.3% increase, compared with the previously reported 0.5% rise for the prior month.

On an annual basis, producer price growth eased slightly to 2.9% from 3.0%, though this was still above expectations for a slowdown to 2.8%.

Investor sentiment was also weighed down by ongoing worries about artificial intelligence-driven job cuts after Block (NYSE:XYZ) revealed plans to reduce its workforce by nearly 50%.

Block CFO Amrita Ahuja said the company sees an “opportunity to move faster with smaller, highly talented teams using AI to automate more work.”

Markets retreated Thursday after two sessions of strong gains. The tech-heavy Nasdaq led declines, while the Dow Jones Industrial Average managed to finish marginally higher.

The Nasdaq pared earlier losses but still dropped 273.69 points, or 1.2%, to 22,878.38. The S&P 500 declined 37.27 points, or 0.5%, to 6,908.86, while the Dow added 17.05 points, less than 0.1%, to 49,499.20.

Weakness was partly triggered by investor reaction to Nvidia (NASDAQ:NVDA), whose shares fell 5.5% despite posting stronger-than-expected quarterly earnings and upbeat guidance.

Nvidia stock retreated from its highest closing level in over three months as investors focused on broader concerns beyond headline results.

“It says a lot when a stock market darling beating revenue forecasts by billions of dollars can no longer muster a positive share price reaction,” said Dan Coatsworth, head of markets at AJ Bell. “The mood music is changing on Nvidia, and it represents a significant shift in investor sentiment.”

He added, “The focus has now shifted to growing competition, concerns about excessive levels of investment across the AI space either being unsustainable or unnecessary, and whether the party will end in tears.”

Nvidia’s decline weighed on the semiconductor sector, with the Philadelphia Semiconductor Index falling 3.2% after closing at a record high in the previous session.

Networking shares also weakened notably, adding pressure on the Nasdaq.

Outside technology, gold mining stocks rallied even as bullion prices slipped, lifting the NYSE Arca Gold Bugs Index 2.9% to a record close.

Airline stocks also advanced strongly, pushing the NYSE Arca Airline Index up 2.3%.

The Dow’s modest gain was supported in part by a 4.0% jump in Salesforce (NYSE:CRM) shares following better-than-expected quarterly earnings.

Meanwhile, separate Labor Department data showed initial jobless claims edged higher in the week ended February 21.

New unemployment claims rose to 212,000, up 4,000 from the prior week’s revised level of 208,000.

Economists had forecast claims would rise to 215,000 from the previously reported 206,000.

U.S. equity futures edged lower on Friday as investors assessed fresh technology earnings and reconsidered positioning around artificial intelligence-driven stocks. Paramount Skydance (NASDAQ:PSKY) is emerging as the frontrunner to acquire Warner Bros. Discovery (NASDAQ:WBD) after Netflix (NASDAQ:NFLX) withdrew from the bidding process, while AI company Anthropic entered a standoff with the Pentagon. Meanwhile, Jack Dorsey’s Block (NYSE:XYZ) surged following a major restructuring announcement, and oil prices moved modestly higher.

Futures slip ahead of market open

Futures tied to major U.S. indices pointed to a softer end to the trading week as markets digested a wave of influential tech-sector results.

At 02:59 ET, Dow futures were down 205 points, or 0.4%, S&P 500 futures fell 13 points, or 0.2%, and Nasdaq 100 futures were largely unchanged.

Wall Street finished Thursday’s session mixed, with investor focus centred on earnings from artificial intelligence leader Nvidia (NASDAQ:NVDA) and enterprise software group Salesforce (NYSE:CRM).

Although Nvidia reported quarterly results that exceeded expectations, investors remained cautious amid rising competitive pressures, concerns about the durability of strong demand, and uncertainty over the timing of meaningful shareholder returns. Nvidia shares — which carry significant weight in major indices — declined by more than 5%.

Salesforce shares advanced despite issuing a weaker-than-expected revenue outlook for the year ahead. Analysts at Vital Knowledge said the results were “no worse than feared.”

Trading also reflected what analysts described as a “violent rotation” within technology stocks, as investors shifted capital away from hardware-focused companies such as chipmakers and data center infrastructure providers toward software and data-oriented businesses.

Analysts argued that “small red flags” from Nvidia, combined with relief surrounding results from Salesforce and Workday, along with comments from AI startup Anthropic stating it aims to “compliment and augment, not kill” software companies, helped drive the shift.

Paramount moves ahead in Warner takeover contest

Paramount Skydance appears set to win the extended takeover battle for Warner Bros. Discovery after Netflix unexpectedly stepped away from negotiations.

Netflix executives — whose shares rose in after-hours trading — said the acquisition was “always a ’nice to have’ at the right price,” but “not a ’must have’ at any price.” While the streaming company has ample financial capacity, some investors had questioned the strategic rationale behind acquiring a traditional media group.

Warner Bros.’ board concluded that Paramount’s $31-per-share offer represented a superior proposal. Netflix was granted four days to respond but ultimately chose not to match the bid, abandoning its $27.75-per-share offer covering Warner Bros.’ studios and HBO Max.

The move positions Paramount — controlled by David Ellison, son of technology billionaire Larry Ellison — to form a larger entertainment powerhouse incorporating major franchises such as “Harry Potter” and “Game of Thrones.” Pending regulatory approval, Paramount would also gain oversight of cable channels including CNN and TBS.

Warner Bros. CEO David Zaslav said a Paramount transaction would “create tremendous value for our shareholders.” Paramount shares rose in extended trading, while Warner Bros. stock declined.

Anthropic clashes with Pentagon over AI safeguards

Artificial intelligence firm Anthropic said it would refuse Pentagon demands to remove safety protections embedded in its AI systems, creating friction between the startup and the U.S. government.

The dispute centres on a Pentagon request to eliminate safeguards designed to prevent the technology from being used for domestic surveillance or autonomous weapons systems.

The Defense Department has warned it may terminate its partnership with Anthropic and designate the company a “supply chain risk” if it does not comply. Defense Secretary Pete Hegseth reportedly set a Friday deadline for the company to approve unrestricted lawful use of the technology.

Anthropic CEO Dario Amodei said he could not agree “in good conscience,” arguing that the military’s request would effectively dismantle critical safety guardrails.

Block shares jump after workforce overhaul

Shares of Block surged more than 23% in after-hours trading after the payments company announced plans to cut nearly half of its workforce as part of a broader push to integrate artificial intelligence into its operations.

The reductions — expected to eliminate over 4,000 roles — come as companies increasingly reshape staffing strategies around AI adoption, raising concerns among workers and economists about employment impacts despite productivity gains.

Block CEO Jack Dorsey said that “[i]ntelligence tools have changed what it means to build and run a company,” adding “[w]e’re already seeing it internally” and “[a] significantly smaller team using the tools can do more and do it better[.]”

Although Block expects restructuring costs of up to $500 million, analysts cited by Reuters suggested the sharp rally reflects investor expectations that a leaner organization could deliver stronger margins.

Oil edges higher amid ongoing U.S.–Iran talks

Oil prices moved modestly higher but remained on track for weekly declines after the United States and Iran agreed to continue negotiations over Tehran’s nuclear program, easing fears of potential supply disruptions.

Brent crude futures rose 0.7% to $71.29 per barrel, while U.S. West Texas Intermediate futures climbed 0.8% to $65.74 per barrel.

For the week, Brent was broadly unchanged, while WTI was poised to fall roughly 1%, reversing part of the previous week’s gains.

Talks between Washington and Tehran concluded Thursday without a definitive agreement, but technical discussions are scheduled to resume next week in Vienna, Omani Foreign Minister Sayyid Badr Albusaidi said in a post on X following meetings in Geneva.

Tensions related to Iran have been a key driver of oil price movements throughout February, as the United States increased its military presence in the Middle East and warned of potential action if negotiations failed.