Global financial markets entered the trading session with palpable tension as investors grappled with the fallout from escalating military confrontations in the Middle East. Last weekend brought news of strikes on Iran and the effective closure of the Strait of Hormuz, sending shockwaves through every corner of the financial system. What unfolded during the previous trading session on March 2 demonstrated both the fragility and resilience of modern markets, as major US indices staged remarkable intraday reversals after plummeting in early trading. The S&P 500 ultimately closed at 6,881.62, posting a modest gain of 0.04 per cent after falling as much as 1.2 per cent during the session. This dramatic recovery pattern repeated across major benchmarks, though not without significant scars.
The Nasdaq Composite led the rebound with greater conviction, finishing at 22,748.86, up 0.36 per cent after erasing losses of 1.6 per cent. Technology stocks, particularly those focused on artificial intelligence infrastructure, provided the muscle for this late-session recovery in New York. Investors who had fled risk assets in the morning found reasons to return by the closing bell, though the whipsaw action left many questioning the stability of current valuations. The Dow Jones Industrial Average told a more sobering tale, declining 0.15 per cent to 48,904.78 after plunging as much as 600 points before clawing back much of the lost ground. This divergence between indices reveals the selective nature of the recovery, with growth-oriented technology names outperforming traditional industrial and financial stocks.
The energy sector emerged as the clearest beneficiary of the geopolitical crisis, surging 1.95 per cent as oil prices reacted to the threat of supply disruptions from the Strait of Hormuz closure. This strategic waterway handles a substantial portion of global petroleum shipments, and any threat to its operation sends immediate ripples through energy markets. Consumer staples lagged behind as investors rotated away from defensive positions and into sectors that could benefit from inflationary pressures. The bond market experienced its own form of turmoil, with the iShares 20+ Year Treasury Bond ETF recording its worst single-day percentage decline of 2026, falling 1.4 per cent as traders recalibrated inflation expectations in light of rising energy costs. This movement in Treasuries signalled growing concern that the Middle East conflict could reignite inflationary pressures just as central banks had begun to gain control over price stability.
Safe-haven demand reached a fever pitch in the gold market, where spot prices climbed to US$5,342.99/oz, marking a gain of 0.40 per cent and representing the fifth consecutive day of advances. Physical demand intensified alongside paper market buying, with reports of extended queues at jewellery stores across Asian markets as domestic prices hit fresh peaks. This sustained buying pressure in gold reflects deep-seated anxiety about the geopolitical situation and its potential economic ramifications. The precious metal has effectively become the primary hedge against both regional conflict and the inflationary consequences that typically follow such disruptions.
Asian markets bore the brunt of the selling pressure as the March 3 trading session unfolded. The Nikkei 225 traded at 57,466.39, down 1.02 per cent as of 10:00 AM in Tokyo, while the FTSE 100 in London closed lower at 10,780.11, down 1.20 per cent, as European investors processed geopolitical fears. This broad-based weakness across Asia-Pacific markets demonstrated how quickly regional conflicts can transmit stress through the global financial system. The divergence between US market resilience and Asian market vulnerability highlights different risk appetites and exposure levels across regions.
The cryptocurrency market provided an unexpected bright spot, surging 3.38 per cent to reach a total market capitalisation of US$2.35T over the 24-hour period. Bitcoin reclaimed the psychologically important US$70,000 level, sparking momentum across the broader digital asset complex. This rally showed a remarkable 93 per cent correlation with the S&P 500, suggesting that crypto has evolved into a macro-driven asset class that moves in tandem with traditional risk indicators. The surge reflected capital flight from Iran following the airstrikes, with crypto outflows from the country spiking by more than 700 per cent as users moved funds offshore to avoid banking scrutiny. This practical demonstration of cryptocurrency utility as a censorship-resistant store of value reinforced the digital gold narrative that proponents have championed for years.
Bitcoin’s breakout above US$70,000 amplified market momentum, supported by a 10.48 per cent jump in total derivatives open interest, signalling renewed leveraged participation. Capital rotated into high-beta sectors with conviction. Layer 1 tokens advanced 4.03 per cent, while AI-themed narratives like Venice Token VVV and NEAR, which gained 18.87 per cent, outperformed sharply. This rotation pattern suggests that an improvement in risk appetite enabled investors to pursue excess liquidity and momentum in areas with the strongest growth narratives. The crypto market’s performance during this geopolitical stress test demonstrates its maturation as a legitimate component of diversified portfolios.
Looking ahead, analysts from Morgan Stanley maintain their year-end 2026 target of 7,500 for the S&P 500, though they caution that political risks and regional conflicts could drive continued short-term volatility. The key question for investors is whether the market can sustain current levels if geopolitical tensions persist or escalate. Bitcoin must hold above US$70,000 to maintain bullish momentum, with a break above US$72,000 needed to confirm continuation toward higher targets. Failure to defend this level could trigger a pullback toward US$68,000 as risk appetite wanes. The coming days will test whether the resilience shown on March 2 represents genuine strength or merely a temporary pause before further turbulence. Markets now wait for clarity on the Middle East situation while monitoring spot Bitcoin ETF flows and Federal Reserve policy signals that could provide direction amid the uncertainty.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
