Market Report.
📰 According to Bloomberg, Fragile ceasefires in place but fighting could resume or escalate at any moment.
No peace deal in sight — US and Iran remain deeply at odds, possibly more so than before Feb. 28
☢️ Nuclear impasse deepens — Iran is now more determined to build nukes after being bombed, just as North Korea’s arsenal has kept Kim Jong Un safe. Hormuz is Iran’s new weapon — Tehran has learned that throttling the strait is more powerful than uranium enrichment; they want to turn it into a “toll booth”.
🚀 US missile stockpiles depleted — ~50% of Patriot and THAAD systems used up, taking years to replenish; allies like Lithuania and Estonia already notified of delays. European allies alienated, US more isolated globally.
🤝 Iran proposed reopening the strait in exchange for the US lifting its blockade and ending the war — deferring nuclear talks for later. White House confirmed Trump and his national security team discussed the offer, but gave no commitment.
🎯 Trump canceled Pakistan talks at the last minute, then claimed Iran quickly followed up with a “much better” offer. Ceasefire remains in effect but both sides continue to jockey for leverage.
🚢 Strait remains near-closed — only a fraction of normal ship traffic getting through; oil near $100/barrel with fears of $200 if fully closed. US naval blockade ongoing — at least 38 ships stopped or turned around so far.
🕰️ Gulf Arab and European leaders estimate nuclear negotiations will take at least six months. Nuclear talks deliberately deferred — Iran wants to separate the Hormuz/war issue from the nuclear program, dealing with it later. Trump insists nuclear issue must be resolved as part of any deal — blockade stays until then.
🇩🇪 Germany is upset.
🗣️ German Chancellor Merz openly criticized the US, saying Trump is being “humiliated” in Iran negotiations. Iran’s negotiators described as highly skilled — Merz says they are effectively not negotiating, stalling the process.
⚠️ US lacks a clear exit strategy, according to Merz — no convincing path to end the war. Europe was not consulted before the US-Israeli assault on Iran began on Feb. 28. Merz expressed his concerns directly to Trump in two conversations, but says he would have been even more forceful had he known the conflict would drag on. Germany is feeling the economic pain — fuel prices spiking and Europe’s largest economy is taking a direct hit.
🇬🇧 UK, Starmer says people they need to start saving because of the war in Iran:
💬 UK Prime Minister Keir Starmer said the prolonged conflict involving Iran could begin to affect everyday consumer behavior, warning that if the situation drags on, “people might change their habits — where they go on holiday this year, what they’re buying in the supermarket, that sort of thing.”
🌾 The Iran war puts food markets on edge:
🌍 UN Secretary‑General António Guterres warned that the disruption of maritime traffic in the Strait of Hormuz “threatens to trigger an energy crisis, severe trade disruptions, and a potential global food emergency.”
🚜 U.S. farm bankruptcies rose 46% as fertilizer costs squeeze farmers: Chapter 12 filings reached 315 in 2025, up from 216 in 2024, marking a third straight annual increase, the American Farm Bureau Federation reported.
🌽 The Midwest was hardest hit with 121 filings (+70%), followed by the Southeast with 105 filings (+69%); together those regions accounted for over two-thirds of filings nationwide.
🧪 Fertilizer costs are worsening the crisis: urea — the most used nitrogen fertilizer — is up about 87% year-to-date and trades near $720/tonne, putting corn growers who rely on nitrogen in a dire position.
📉 Many farmers say they will cut fertilizer use, switch from corn to less nitrogen-dependent soybeans, or accept lower yields as pressure mounts on farms.
🛡️ Not all markets are at risk from the Iran war:
💰 Global military spending hit a record $2.89 trillion in 2025, rising for the 11th consecutive year, driven primarily by Europe’s rearmament push and surging Asian defense budgets. As a share of GDP, spending reached 2.5% — the highest since 2009 — amid wars, geopolitical instability, and growing great-power competition.
🇪🇺 Europe was the biggest driver of growth, with spending jumping 14% to $864 billion. Germany led the region (excluding Russia), surging 24% to $114 billion and exceeding NATO’s 2% GDP target for the first time since 1990. Spain stood out with a dramatic 50% increase to $40.2 billion, also crossing the 2% threshold for the first time since the NATO target was set in 1994.
🇺🇸 US spending actually fell 7.5% in 2025 to $954 billion — still the world’s largest — mainly due to no new Ukraine aid being approved. However, this decline is expected to be short-lived, as the Pentagon has already requested a record ~$1.5 trillion for fiscal 2027.
🌏 Asia is also investing in war. Japan hit its highest defense share of GDP since 1958, lifted its weapons export ban, and signed its first warship export deal with Australia. Taiwan ramped up spending 14% as Chinese military incursions around the island hit a record 5,709 aircraft sorties in 2025, up from just 380 in 2020. China remains the world’s second-largest spender, raising outlays 7.4% to an estimated $336 billion — though experts believe the true figure is significantly higher.
📈 Defense stocks delivered extraordinary returns in 2025. South Korea’s Hanwha Aerospace surged 193%, Hyundai Rotem gained 278%, and Germany’s Rheinmetall climbed 154% while ThyssenKrupp soared 215%. Japan’s IHI Corp spiked 107%, and the EU outlined plans to mobilize up to €800 billion in defense investment by 2030.
📊 And in case you’re wondering what ETFs are the top in defense stocks including high exposition to European companies (Europe needs to build an army), I’ve also researched it: VanEck Defense UCITS ETF (DFNS) is the largest at €7.3bn with a TER of 0.55% and offers broad exposure to global defence names including major European firms; HANetf Future of Defence UCITS ETF, a €2.6bn fund with a 0.49% TER, delivered strong recent performance (‑40.79% in 2024 and +37.26% in 2025); and iShares Global Aerospace & Defence UCITS ETF (USD Acc) holds about €1.5bn, charges a 0.35% TER and returned +36.57% in 2025.
🧬 Leadership in medical research.
🧪 Robert F. Kennedy Jr. warned that the U.S. is losing its edge to China in medical research and drug development, saying “China is now eating our lunch.” He claimed China had more drug approvals last year, increased its share of clinical trials from about 3% to roughly 30%, and argued that the U.S. is losing scientists, intellectual property, and top researchers. He also warned the country could lose its biosecurity and criticized accelerated drug approvals in the U.S. as occurring at record levels.
🏦 Monetary Policy in Japan:
📉 BOJ held rates steady at 0.75%, as widely expected. 3 out of 9 board members voted to hike rates, signaling internal pressure. Iran war driving inflation concerns among policymakers.
💴 Yen slightly strengthened to 159.02 per USD following the decision. 160 yen/USD is a critical threshold — Tokyo has intervened in markets at that level before. Yen has been stuck near 159 since mid-March, showing persistent weakness.
Market View.
⏳ US futures remain largely unchanged as markets await further signals regarding the conflict in the Middle East.
📈 S&P 500 futures are currently trading at 7,192, while Nasdaq 100 futures stand at 27,325.
💵 The US dollar index (DXY) is strengthening again — a move that so far appears consistent with heightened geopolitical tensions — and is currently trading at 98.40. This is weighing on major currency pairs such as EUR/USD, which has fallen back below 1.1700 after reaching highs of 1.1750 yesterday.
🇪🇺 In Europe, futures are also lacking clear direction.
📊 DAX 40 futures remain steady at around 24,200, while Euro Stoxx 50 futures are trading near 5,815.
🛢️ The oil market continues its gradual upward trend, with spot Brent crude approaching $104 per barrel.
🥇 Gold futures are weakening again, falling below $4,650 per ounce, pressured by dollar strength.
₿ Meanwhile, Bitcoin, which approached $79,500 early Monday morning, has declined to approximately $76,685.
