Once again, Donald Trump has taken everyone by surprise. Investors had headed into the weekend trying to work out which sector might next be shaken by artificial intelligence and looking ahead to the forthcoming US employment figures. Within hours, all of that had been swept aside.

To understand what unfolded over the weekend, it is worth stepping back. In January, a wave of protests shook the regime in Iran, which responded with a brutal crackdown on its own population. Donald Trump threatened to intervene, before backing down. Since then, the United States has amassed substantial forces in the region. At the same time, Washington and Tehran had resumed a cycle of negotiations under Omani mediation.

Tensions flared again ten days ago when an Axios report suggested the United States was close to a major war with Iran. The issue quickly slipped down the agenda, however, amid the Supreme Court’s striking down of tariffs and concerns over disruption linked to AI. All the more so as American and Iranian negotiators had reported progress in Geneva last week, with further technical talks scheduled for Vienna this week.

Yet the United States and Israel ultimately chose to strike on Saturday morning. What emerged over the weekend, through a New York Times report, is that the timing of the operation was driven by opportunity. The CIA is said to have been alerted to a meeting convened around the Supreme Leader at his official residence in Tehran. It was there that Ali Khamenei, in power since 1989, was killed. According to Donald Trump, 48 Iranian leaders have already been killed, including the defence minister, the chief of staff of the armed forces and the head of the Revolutionary Guards.

Iran retaliated with missile strikes targeting Israel and US bases in the region, causing damage in several Gulf states, notably the United Arab Emirates, Bahrain and Qatar. The Pentagon confirmed yesterday the deaths of the first American soldiers in the operation. In recent hours, the conflict appears to have widened, with Lebanon’s Hezbollah firing missiles towards Israel. Last night, France, the United Kingdom and Germany indicated they could strike Iran if missile attacks on Gulf countries continue.

These are the known facts. Beyond that, it is extremely difficult to predict how long the conflict will last or where it will lead. Donald Trump yesterday suggested it could run for four weeks. What is certain, however, is that the US president is taking an immense risk, without doubt the most significant of his two terms in office.

First, because externally imposed regime change has often generated more chaos than democracy, even if promoting democracy is not an objective of this administration. Second, because Americans, particularly those who voted for him in 2024, are opposed to foreign military interventions. According to a Reuters/Ipsos poll published yesterday, only one in four Americans supports US strikes on Iran.

Why proceed nonetheless? One plausible explanation is that he is playing for his place in history rather than his standing in the polls. Donald Trump turns 80 this year and cannot run again in 2028. He has the opportunity to eliminate an enemy of the United States, a regime that for 47 years has targeted American interests and destabilised the Middle East. This historical dimension featured prominently in his address on Saturday morning, when he recalled episodes that traumatised America: the 1979 hostage crisis at the US embassy in Tehran and the 1983 Beirut bombing that killed 241 American servicemen.

Another consequence the administration will have to manage is the rise in oil prices. WTI has climbed from 67 dollars on Friday to 72 dollars this morning, while Brent has rebounded to 78 dollars. Most shipping companies, oil majors and trading houses have suspended all shipments through the Strait of Hormuz after Tehran warned vessels against transiting the passage. More than 20% of global oil supply passes through the strait. According to Bloomberg, the price of a barrel could surge to as much as 108 dollars in the event of a closure of the Strait of Hormuz.

Beyond oil, other market moves this morning come as little surprise. Volatility indices have risen, equities are set to open in negative territory and safe-haven assets, gold, the Swiss franc and sovereign bonds, are playing their role. Energy stocks should be among the day’s winners. By contrast, the airline sector is expected to come under marked pressure, as traffic across the Gulf is severely disrupted, quite apart from higher oil prices.

Clashes in the Middle East are likely to dominate the news flow in the coming days, if not crowd out everything else. On the macroeconomic calendar, the key event will be the US February employment report, due two weeks before the Federal Reserve’s next meeting on 17-18 March. On the corporate front, the earnings season is not quite over. In Europe, Thales, ASM International, Bayer and Adidas are due to report. In the United States, attention will turn to CrowdStrike, Marvell Technology, Costco and, above all, Broadcom.

Today's economic highlights:

On today's agenda: company gross profits in Australia; BoJ Himino's speech in Japan; FDI in China; in the United Kingdom, Nationwide housing prices and BoE consumer credit; in Germany, retail sales; in Switzerland, retail sales and procure.ch manufacturing PMI; in Spain, HCOB manufacturing PMI; in Italy, HCOB manufacturing PMI, full year GDP growth, and government budget; ECB President Lagarde's speech for the Euro Area; in Canada, S&P Global manufacturing PMI; in the United States, ISM manufacturing employment and ISM manufacturing PMI. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$5,386.94
  • Crude Oil (BRENT): US$78.57
  • United States 10 years: 3.96%
  • BITCOIN: US$65,722.6

In corporate news:

  • HSBC reported strong Q4 2025 results, leading RBC to raise its FY27 adjusted profit forecast by 9% and increase its price target to £12.00.
  • Unilever is expected to see minimal impact on sales from the rise of GLP-1 weight-loss drugs, with analysts maintaining their hold rating and price targets.
  • B&M European Value Retail completed its migration and registration in Jersey, with shares expected to begin trading on the London market.
  • Greggs is set to report a 9% drop in 2025 pretax profits, facing pressures from weight-loss drugs, cost of living, and tax changes.
  • Most airlines are suspending traffic around the Middle Eastern zone.
  • UBS intends to maintain Ermotti in his post beyond 2027.
  • Hapag-Lloyd introduces a war risk surcharge for freight in the Gulf due to disruptions in the Middle East.
  • AP Moller Maersk is to reroute its Middle Eastern lines around Africa.
  • Roche's fenebrutinib reduces relapse rates in a late-stage trial for multiple sclerosis.
  • Avolta cancels 4.9 million of its own shares.
  • Raiffeisen divests the majority of its stake in Leonteq.
  • SGS acquires Granite River Labs Services.
  • EQT is forced to bail out Cerba laboratories to the tune of 200 to 300 million EUR, according to La Lettre.
  • Nvidia signals AI breakthrough with next-generation chip architecture According to reports in the Wall Street Journal, Nvidia is preparing to launch a new processor designed to accelerate AI workloads, a move poised to further disrupt the global computing landscape.
  • Moody's maintains negative watch on Warner Bros. Discovery following Paramount deal The ratings agency has confirmed that Warner Bros. Discovery's credit rating remains under review for a potential downgrade, following the group's high-profile announcement to acquire Paramount.
  • Tesla raises entry price for US Cybertruck to 69,990 USD In a shift in its pricing strategy, Tesla has increased the cost of its base-model Cybertruck in the United States, now starting at 69,990 USD.

See more news from UK listed companies here

Analyst Recommendations:

  • Auto Trader Group Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 685 to GBX 615.
  • Howden Joinery Group Plc: Stifel maintains its buy recommendation and raises the target price from GBX 950 to GBX 1090.
  • Rightmove Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 670 to GBX 600.
  • Hsbc Holdings Plc: BNP Paribas maintains its outperform rating and raises the target price from GBX 1415 to GBX 1550.
  • Diageo Plc: HSBC downgrades to hold from buy and reduces the target price from GBP 26 to GBP 18.
  • Segro Plc: Panmure Liberum maintains its buy recommendation and raises the target price from GBX 830 to GBX 900.
  • Unite Group Plc: Panmure Liberum downgrades to sell from hold and reduces the target price from GBX 675 to GBX 430.
  • Pearson Plc: UBS maintains its buy recommendation and reduces the target price from GBX 1460 to GBX 1300.
  • Gsk Plc: Morgan Stanley maintains its underweight recommendation and raises the target price from GBX 1600 to GBX 1700.
  • Shell Plc: JP Morgan maintains its overweight recommendation and raises the target price from GBP 34 to GBP 36.
  • Fevertree Drinks Plc: Citi maintains its neutral recommendation and raises the target price from GBP 8.50 to GBP 9.58.
  • Centrica Plc: Jefferies downgrades to hold from buy and raises the target price from GBX 200 to GBX 210.
  • Frontline Plc: Fearnley Securities maintains its buy recommendation and raises the target price from USD 29 to USD 44.
  • Bankinter, S.a.: JB Capital Markets S.V., S.A. maintains its buy recommendation and raises the target price from EUR 17.10 to EUR 18.
  • Royal Unibrew A/S: DNB Carnegie maintains its buy recommendation and raises the target price from DKK 705 to DKK 715.