Reuters Morning Bid Oil spikes and stocks slide
Mar 3, 2026
Rising Middle East conflict sends oil and European gas prices sharply higher, rattling markets worldwide. Treasury yields climb as inflation worries push rates up. Currency tensions heat up with Japan and Switzerland warning of intervention. Asian stock sell-offs contrast with a surprising U.S. bounce driven by programmatic trades and sector rotation.
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Dollar Strength Is Relative To Energy Exposure
- The dollar's recent strength is a relative play driven by which economies lose most from higher energy prices rather than a classic safe-haven bid.
- Mike Dolan notes Japan and China are highly exposed to Middle East oil and the Straits of Hormuz, while the US is a net energy exporter, supporting the dollar.
Divergent Market Reactions Mask Underlying Risk
- Global equity moves varied: Wall Street briefly bounced on programmatic buying while Asian markets fell heavily as the conflict hit regional risk appetite.
- Mike Dolan cites a 7% drop in South Korea and 3% in Japan, reversing earlier strong YTD gains.
Yields Rise As Inflation Risk Trumps Safe Haven
- Treasury yields rose sharply, especially at the short end, as markets priced in higher inflation risk from energy shocks rather than seeking safe havens.
- Amanda Cooper points to rising break-even inflation and forward inflation swaps showing the market thinks elevated prices may persist.