by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with the latest news on the Iran War and discusses how challenging it will be to end the conflict in the near term. We next review several other international and US developments with the potential to affect the financial markets today, including the European Union’s plans to adjust its environmental and tax policies to shield investors from higher energy prices and new survey results suggesting artificial intelligence isn’t having much impact on corporate hiring plans just yet.

United States-Israel-Iran: After global stocks tanked early yesterday on a surge in energy prices related to the war in Iran, they reversed and ended with decent price gains after President Trump said in an interview that the war was substantially finished. We recognize that the threat of much higher gasoline prices and other economic disruptions could force the president to wind down the war. However, we think ending the war and dislodging US forces will be easier said than done. Geopolitical and economic tensions in the region are likely to continue.

• Separately, the Wall Street Journal reported last night that some of President Trump’s advisors have privately urged him to look for an exit plan amid spiking oil prices and concerns that a lengthy conflict could spark political backlash.
• However, as long as Tehran continues to attack regional countries and Israel still wants to strike Iranian targets, it is unlikely that the US could easily withdraw from the war. That’s especially the case if Iran continues to threaten the shipment of oil, gas, and other mineral products through the Strait of Hormuz.
• One official also reportedly said that the president won’t withdraw US forces until he can claim a satisfactory victory. That alone raises the risk that the war could continue, since Iran could well continue to stage asymmetric attacks regionally or around the world for some time to come. Indeed, Iranian officials yesterday insisted they won’t discuss a ceasefire with the US or Israel.
• Separately, after the International Energy Agency yesterday convened a meeting of the finance ministers of top countries, a spokesman said the group is prepared to take all necessary measures, including drawing on strategic stock reserves, in order to stabilize the market. Historically, substantial drawdowns of strategic reserves during geopolitical crises have helped bring down energy prices.
• Despite the difficulty of ending the war soon, investors today appear to be responding to the president’s assurances that it is winding down. Global oil prices are down some 7% so far today, with Brent crude currently trading at about $92.18 per barrel. In turn, that has given a lift to global stock values so far this morning.

European Union: As the Iran War continues to buoy global oil and gas prices, officials in the European Commission have begun exploring adjustments to the EU’s environmental and tax rules to help hold down energy costs for consumers. The national governments of France, Italy, Spain, and other countries are also showing signs they may intervene in their markets to hold down energy costs for consumers. For example, the French government has ordered a series of checks on gasoline stations to root out price gouging.

Japan: New reporting says the government of conservative Prime Minister Takaichi is launching a survey of Japanese ground-water resources that will include tracking the nationalities of users. The initiative has alarmed foreign nationals in the country who fear that Japan’s current wave of anti-immigrant fervor could dispossess them of water needed for personal or industrial uses. The move threatens to scare away foreign workers and investors needed to make up for the country’s ongoing population challenges.

China: The total dollar value of exports in January and February rose 21.8% from the same period one year earlier, triple the expected increase and far more than the 6.6% rise in December. With imports up a relatively more muted 19.8%, the January-February trade balance showed a record surplus of $213.6 billion. The continuing imbalance reflects China’s weak domestic demand and the government’s encouragement for firms to sell their excess production overseas. The record surplus will likely continue to spur trade tensions with other countries.

United States-China: At a forum yesterday, Assistant Secretary of Energy Audrey Robertson asserted that recycling rare metals, materials, and magnets within the US is one of the fastest ways the country can boost its access to critical minerals and sidestep China’s near monopoly on some of them. As the federal government works frantically to boost US critical minerals supplies, the statement suggests investors could find opportunities among recyclers and processors, rather than just critical-mineral miners.

• According to Robertson, “New technology in this space will be a game changer … I think you will see significant gains in the output from recycled black mass and material in the coming 12 months.”
• Black mass is the powdery residue from lithium-ion batteries that contain valuable critical minerals.

US Stock Market: Nasdaq yesterday said it is working with crypto exchange Kraken to offer tokenized stocks on Kraken’s platform. The firms are apparently focusing on the legal and governance details that would give the owners of tokenized stocks the same governance rights as holders of the underlying securities, including proxy voting and dividend payments. Issuing companies would have to opt into the plan. According to reports, Nasdaq and Kraken hope to have the plan up and running by early 2026.

US Labor Market: According to KPMG’s new CEO Outlook Pulse for 2026, only 9% of surveyed chief executives plan to cut their workforce this year because of artificial intelligence. Indeed, fully 55% expect to increase their hiring in 2026 as a direct result of AI, while 36% expect no change in hiring. The data provides a counter-narrative to widespread corporate, individual, and investor concerns about job losses due to AI.

US Airline Industry: The Wall Street Journal reports that the ongoing funding standoff for the Department of Homeland Security has begun to seriously slow security checkpoints at some major airports, including Houston, New Orleans, and Atlanta. Although Transportation Security Administration officers are supposedly working without pay, staff shortages have slowed wait times for security checks to as much as several hours at some airports. The disruptions are increasingly raising the political stakes for the administration.

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