Strait warfare reignites, Brent oil returns to the $100 mark, gold edges up, and AI trading supports the rally in Asian stock markets.

This week’s record-setting rally in global stock markets faced headwinds on Friday’s closing day, as direct clashes between US and Iranian forces erupted in the Strait of Hormuz, reigniting concerns about potential disruptions to energy supplies and driving Brent crude oil above $100 per barrel. However, several analysts noted that investors overall tend to view this round of geopolitical volatility as a temporary fluctuation, rather than a turning point that could reverse the AI-investment-driven bull market.

On Friday, March 8th, the MSCI Global Index fell 0.3%, and Asian stock markets retreated 1.1% from their record closing highs; European market futures similarly indicated opening pressure. Nevertheless, Asian stocks are still poised to post a fifth consecutive weekly gain, marking the longest winning streak since January this year. S&P 500 futures rebounded slightly by 0.2%, showing some resilience in the market.

According to Xinhua and CCTV News, citing Iranian media reports, US forces conducted strikes on Iranian coastal civilian areas and oil tankers. Iranian armed forces responded by launching missiles at US military vessels, with reports that three US destroyers were attacked and retreated toward Oman. Brent crude rose about 1% to around $101 per barrel, as traders worried that a prolonged blockade of the Strait of Hormuz could seriously disrupt global oil and gas supplies. Nevertheless, oil prices are still down more than 6% for the week, reflecting the market’s basic expectation that the conflict will ultimately be contained.

The dollar hovered around pre-war levels, the 10-year US Treasury yield remained at 4.39%, up two basis points for the week, with inflation concerns sparked by high oil prices being the main source of pressure. Gold edged up to around $4,710 per ounce. Amid multiple uncertainties, global capital markets are undergoing a new round of risk repricing.

MSCI Global Index slid 0.3%; Japan's TOPIX fell 1% on the day. South Korea’s Kospi erased its losses.Euro Stoxx 50 futures fell 0.7%; S&P 500 futures edged up 0.2%.The dollar spot index was little changed.10-year US Treasury yield stayed at 4.39%, up two basis points this week.Brent crude rose about 1% to around $101 per barrel. WTI crude was up 0.9%, at $95.66 per barrel.Spot gold increased 0.6%, reaching $4,714.64 per ounce.Bitcoin fell 0.3%, at $79,639.76.

Stocks "see through" war, oil price sticks to premium

Under persistent geopolitical pressure, global capital markets are exhibiting significant internal divergence.

"Stocks are ‘seeing through’ the war, while oil prices remain at a war premium," said Hebe Chen, senior market analyst at Vantage Global Prime, based in Sydney. "This divergence tells you that the market has quietly concluded that the worst-case scenario is fading and has moved on, even if the ink is not yet dry."

The core logic driving recent strength in global stocks is the widespread expectation among investors that massive spending in the AI sector will boost corporate earnings, prolonging the so-called "AI trade." Supported by this outlook, even amid geopolitical volatility, market focus remains on US efforts to ease tensions, betting that moderation will help control energy prices and preserve overall risk appetite.

Jacky Tang, Chief Investment Officer for Emerging Markets at Deutsche Bank’s Private Banking division, said oil price movements will depend heavily on how long the Iran war lasts, and provided price range forecasts under different scenarios.

Trump’s diplomatic pressure, stalled negotiations for reopening the strait

On the diplomatic front, the competition among all parties is complex and tangled.

Trump referred to the military action as a "light tap," while using tough language to pressure Tehran, warning that if Iran does not reach an agreement soon, the US will take even harsher measures in the future. Trump previously announced "Project Freedom" to assist ships passing through the Strait of Hormuz, but then abruptly halted it. Reports say Saudi Arabia and Kuwait have lifted restrictions on US forces using local military bases, potentially paving the way for the Trump administration to reboot the initiative.

Nonetheless, the outlook for negotiations remains unclear. An Iranian official reportedly stated Iran would not accept the reopening of the Strait of Hormuz under "unrealistic proposals." Washington is currently waiting for Tehran's response to the reopening plan, with tensions remaining high in both the Persian Gulf and Lebanon.

Asian stocks rally for five weeks, Korea leads the world

Despite Friday’s pullback, Asian stock markets overall remain robust, and are on track to log a fifth consecutive weekly increase. The Korean Composite Stock Price Index (Kospi) has become the best-performing major stock index globally since 2026, as the market bets that Korean companies will continue to benefit as core suppliers in the construction of AI infrastructure during this tech wave. Goldman Sachs has raised its target for Korea’s benchmark index to 9,000 in less than three weeks, citing sustainable profitability in semiconductor memory chips.

Yugo Tsuboi, Chief Strategist at Daiwa Securities, pointed out that multiple stock markets have seen "very rapid gains, lacking sufficient driving factors," and negative news is liable to trigger profit-taking. "But I don't think the optimism accumulated in the past week for reaching an agreement will completely evaporate after this," he added.

Jun Bei Liu, co-founder of hedge fund Ten Cap Investment Management, said investors presently expect the Iran war or Hormuz Strait issue to reach some resolution within about a month. "There may be volatility and negative headlines like today in the near term, but unless the situation escalates seriously again, the market overall will tend to buy the dips," he said.

Tariff ruling and UK election bring extra variables

In other markets, the Trump administration’s 10% global tariff measures were ruled unlawful by the Federal Trade Court, marking yet another legal setback for Trump’s efforts to impose tariffs without congressional approval.

In Europe, the pound and UK bonds will also be in focus. Prime Minister Starmer is awaiting the results of a local election seen as the UK's most decisive in recent years, with the outcome expected to directly impact the price of UK assets.

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