Public Markets 8-Hour Briefing
×Market Turmoil and Defense Surge
Defense stocks surged Monday as military attacks escalated across the Middle East, with operations underscoring that air and naval assets remain central to military strategy. The S&P 500 rebounded from an early 1.2% drop to finish up less than 0.1%, while Brent crude moderated an early double-digit surge to a 6.7% climb. Energy shares surged alongside oil futures as producers jumped on a chance to lock in prices for future sales amid the crude market's most volatile moves since June.
Geopolitical Escalation and Oil Markets
Oil held the bulk of Monday's gain as the US and Israel stepped up their war against Iran, while Tehran threatened a full closure of the Strait of Hormuz. Benchmark diesel futures rose by 23%, and European natural gas prices spiked as the conflict disrupted critical energy infrastructure. Qatar downed two Iranian Su-24 jets in the first crewed aircraft destroyed in combat since fighting began last week. The Hormuz crisis is a wake-up call for complacent gas consumers as the world reckons with its dependence on oil and other energy vulnerabilities.
Treasury Market and Inflation Concerns
The Treasuries rout shows Iran conflict reigniting inflation worry as investors see the risk of a protracted conflict keeping crude prices elevated. Inflation is re-emerging as the crucial worry in the $30 trillion Treasuries market, with haven assets like gold edging higher amid the ongoing Middle East conflict. Former Treasury Secretary Yellen said the Iran conflict will likely hit US economic growth and increase inflationary pressures, potentially keeping the Federal Reserve "even more on hold."
Emerging Markets and Currency Pressures
JPMorgan dialed back its bullish emerging-market calls on Iran war, reducing overweight recommendations on emerging-market currencies and local bonds due to the risks posed by US attacks. EM stocks and currencies came under pressure as the US dollar jumped, forcing investors to rethink emerging market bets. Top Philippine funds are eyeing more stocks as the selloff fueled by Middle East conflict provides buying opportunities for the country's top pension fund.
Private Credit and Secondary Markets
Blackstone's flagship private credit fund was hit with redemptions as investors pulled net $1.7 billion out of the vehicle over the first quarter, as industry strains intensify. Ares Management closed an $850 million continuation fund for Convergint, allowing an asset bought in 2018 to be rolled into a new vehicle. Ares also emerged as the primary buyer for a $2.2 billion private credit portfolio sold by Arcmont Asset Management in the market for secondhand stakes.
IPO Market and Market Volatility
Companies planning IPOs are weighing how to ride out the volatility set off by Middle East events, with bankers looking for ways to finish deals nearing completion. SoftBank's PayPay delayed the start of formal marketing for its US IPO, which would be the biggest-ever listing for a Japanese company on a US exchange. LS Power is seeking to raise as much as $2.1 billion from the sale of a stake in NRG Energy after the stock market shrugged off potential impacts from the Iran conflict.
Technology and AI Developments
Nvidia-backed 'open' AI start-up is courting investors at a $20 billion-plus valuation as the Trump administration seeks US rivals to China's DeepSeek. Intuit is partnering with Anthropic, raising questions about whether to buy, sell, or hold INTU stock. Tech giants see a cure for cancer in AI, though Eli Lilly's CEO finds it "not particularly good" at solving biology or chemistry problems.
Airline Industry Disruptions
Airlines are grappling with disruptions that "far surpass" past Middle East conflicts after thousands of flight cancellations. Carriers face higher fuel costs and complicated rerouting as the conflict threatens both demand and cheap fuel that had driven strong airline finances. The CEO of Hapag-Lloyd warned that vessels and crews are stuck in the Persian Gulf, with the Iran conflict delaying shipping's return to the Suez Canal.