Soaring 36%! Just now, breaking news from Japan! Pakistan also shows signs of movement! Trump's latest statement

Market Volatility Intensifies!

On the morning of March 3rd, the shipping sector surged, with Ningbo Shipping, China Merchants South Oil, and COSCO Shipping Energy all hitting the daily limit. Air China Ocean saw a gain of over 23%. According to reports, the benchmark rates for transporting gasoline, diesel, and naphtha—clean petroleum products—on routes from the Persian Gulf to Japan soared over 36% as ships avoided passing through the Strait of Hormuz.

Meanwhile, Pakistan also experienced developments. The U.S. Embassy in Pakistan announced on the 2nd local time that the U.S. Consulate in Peshawar has suspended operations starting March 2nd. The embassy in Islamabad will continue to serve U.S. citizens.

U.S. President Donald Trump stated on the 2nd local time that “the U.S. will soon take retaliatory action” regarding the attack on the U.S. Embassy in Saudi Arabia. During an interview with a reporter from the U.S. National News Channel, Trump also said he does not believe a ground military operation against Iran is necessary.

Shipping Sector Soars

On March 3rd, port and shipping concepts continued their strong performance, with China Merchants South Oil hitting two consecutive daily limits. Shares of Air China Ocean, COSCO Shipping Energy, China Merchants Steamship, and others also rose. Due to Middle East conflicts, oil tanker freight rates surged to record highs. According to the Baltic Exchange, the daily earnings for benchmark oil tankers reached $424,000.

The International Transport Workers’ Federation (ITF) issued a statement on its website, saying that after the escalation of military attacks in the region, the ITF and the Joint Negotiating Group have designated the Strait of Hormuz and surrounding waters as a “high-risk area.” This designation means shipowners and operators must provide enhanced protection for crew members, including risk assessments before navigation, insurance as per contracts, and crew members’ right to refuse entry into the area. The ITF represents 16.5 million transport workers worldwide, while the Joint Negotiating Group is composed of maritime industry employers.

At the same time, global stock markets nearly all declined sharply. In the morning, the MSCI Asia-Pacific Index fell 1% to 254.46 points. The Nikkei 225 index dropped further to a 2% decline. South Korea’s Kospi index fell 3% to 6,055.26 points. The three major A-share indices each declined over 1%, with declines led by non-ferrous metals, precious metals, military, and rare earth sectors. Nearly 4,400 stocks in Shanghai, Shenzhen, and Beijing declined. The Hang Seng Tech Index fell 1% intraday. U.S. and European stock index futures also declined across the board.

According to Iran’s Tasnim News Agency on March 3rd, Iran’s Islamic Republic Broadcasting and surrounding areas were again targeted by airstrikes from U.S. and Israeli forces. Peman Jebeli, director of IRIB, told Iranian media that recent attacks on the broadcaster’s headquarters indicate Israel’s hostility toward the media. The Israel Defense Forces issued a statement saying they struck and destroyed an Iranian “communications center,” and will continue to target infrastructure in other parts of Tehran.

What’s Next?

Amid the latest Middle East conflict, crude oil prices surged significantly, but historical data suggests stock market losses may be limited.

Goldman Sachs pointed out that since 2000, among 22 instances where U.S. crude oil futures rose 10% or more in a single day, the S&P 500 index generally experienced positive returns in the short term after a sell-off. The average decline of the S&P 500 the next day was 0.24%, but the average one-month return was 1.23%.

Goldman Sachs also noted that the U.S. stock market may need further corrections before achieving more sustained gains, as market sentiment remains weak and capital flows fluctuate, making the S&P 500 vulnerable after recent failure to break above 7,000 points.

The report mentioned that although the macroeconomic environment is generally improving, the stock market still struggles to digest geopolitical tensions and sharp commodity price swings, leading to recent difficulties. It suggests that for the market to continue rising, a correction and adjustment are necessary.

Morgan Stanley issued a report stating that unless oil prices rise sharply and persistently, conflicts in Iran and the Middle East are unlikely to shake the outlook for U.S. stock market gains over the next 6 to 12 months. Historically, geopolitical risk events have not caused sustained volatility in U.S. stocks. The report highlighted that the healthcare sector remains the preferred defensive allocation, mainly due to low valuations, profit improvements, and reduced policy uncertainty.

(Source: Securities Firms China)