Global markets are feeling the impact of the Middle East conflict, with no country entirely immune, though the severity varies. U.S. stocks fell approximately 1% yesterday, while China's Shanghai Composite Index dropped 0.98% today. Hong Kong's Hang Seng Index declined 2.01%. Markets with weaker risk resilience suffered sharper losses. For instance, Thailand's SET index plunged 8% today, triggering a 30-minute trading halt. South Korea's KOSPI index fell over 12%, activating a circuit breaker. This sell-off was driven by foreign investors offloading more than $3 billion in Korean stocks this week, following a record $13.7 billion sell-off last month. The selling pressure was concentrated in artificial intelligence-related stocks, as markets remain skeptical about whether the sector's massive capital expenditure plans will ultimately yield sufficient profits.

A swift end to the conflict appears unlikely, as Iran has yet to select a new supreme leader, with the election potentially delayed until next week. The election process itself is high-risk; the Experts Assembly building was completely destroyed in an attack during the vote-counting process, though key members had evacuated following an early warning. Iran's Islamic Revolutionary Guard Corps claimed on the 4th that satellite imagery showed it had struck the third U.S. "THAAD" anti-missile system deployed in the Middle East. With the U.S. operating eight systems globally—four domestically, two in the Asia-Pacific, and three in the Middle East—at least two appear destroyed, while the one in Saudi Arabia remains operational for now. The Patriot missile defense system has also suffered significant damage, leaving effective air defense networks in the Middle East compromised. A direct consequence is that, in a worst-case scenario, key oil fields in Saudi Arabia and the UAE could be difficult to protect.

In response to Iran's blockade of the Strait of Hormuz, former U.S. President Donald Trump announced two measures on social media: 1) Instructing the U.S. International Development Finance Corporation to offer political risk insurance and financial security at reasonable rates for all maritime trade, especially energy, passing through the Gulf region, available to all shipping companies. 2) If necessary, the U.S. Navy will begin escorting oil tankers through the Strait of Hormuz. However, Iran has reiterated its blockade, threatening to strike any vessels attempting to pass through. Shipping stocks such as COSCO SHIPPING Energy Transportation and COSCO Shipping Development fell over 10% today. The decline was not primarily due to the blockade itself, as few would risk passage even with Trump's measures. The key factor is Saudi Aramco exploring options to redirect more shipments through Yanbu Port. Saudi Arabia possesses a cross-country pipeline with a daily capacity of 5 million barrels, transporting crude from eastern oil fields to the Red Sea coast. This route could largely secure European supplies, as bypassing the Cape of Good Hope is safe. Consequently, European markets may fare better. However, South Korea and Japan remain vulnerable, as the Red Sea is controlled by Houthi forces, and the Malacca Strait route is inaccessible. For other regions, the Bab-el-Mandeb route remains risky, which is why COSCO Shipping Holdings saw a smaller decline.

Overall, if the conflict prolongs and Yanbu Port's capacity restart takes time, supply-demand gaps are likely to widen, increasing the probability of sustained oil price increases. Escalating Middle East tensions have also raised concerns about supply chain stability for the region's aluminum smelting capacity. Six Middle Eastern countries possess approximately 7 million tons of aluminum production capacity, with Iran contributing nearly 800,000 tons. Both raw material inputs and finished product outputs face dual threats. With global aluminum inventories having limited shock absorption capacity, aluminum prices are trending upward. Aluminum International Engineering surged nearly 8%, while Nanshan Aluminum International, Chalco, and China Hongqiao all rose over 5%.

The spillover effects of the conflict continue to emerge. Amazon Web Services reported that two data centers in the UAE and one in Bahrain were damaged by drone attacks, taking facilities offline and causing temporary digital service disruptions for several major financial institutions. Luxury stocks were among the hardest-hit sectors this week. LVMH, Kering, and Burberry saw declines approaching 10% week-to-date, as the region represents a significant portion of their business and has been a key growth driver for European luxury brands.

With the oil and gas sector temporarily constrained, capital has shifted to other areas. China's National Energy Administration held a symposium on green fuel industry development and advanced 19 national standards, including hydrogen fuel quality requirements, aiming to reduce reliance on oil. Hydrogen energy stocks such as Beijing Jingcheng Machinery Electric surged over 12%, and Guofu Hydrogen Energy rose over 6%. The logic of power shortages in Europe and the U.S. continues to play out, with gas turbine concepts rallying sharply. NE Electric surged nearly 32%, and Dongfang Electric rose over 11%.

In defense, escalating Middle East conflicts could fuel global arms races, potentially boosting valuations for missile, drone, air defense, and naval ship industry chains. China State Shipbuilding Corporation gained over 4%. Domestically, memory chip leader BIWIN Storage reported stellar 2025 results, with revenue reaching 11.296 billion yuan, up 68.72% year-on-year, and net profit attributable to shareholders surging 437.56% to 867 million yuan. ASMPT reported better-than-guided Q4 2025 results, with revenue rising 31% to 4.254 billion yuan, and its stock rose over 4%. GigaDevice Semiconductor increased over 6%.

Mohammad Mokhber, senior aide to the late Iranian Supreme Leader Khamenei, stated on March 4 that Iran has no intention of negotiating with the U.S. and is prepared to fight as long as necessary, reminiscent of the 1980-1988 Iran-Iraq war. U.S. gold and silver stocks rose pre-market, with Hecla Mining, Gold Fields, Eldorado Gold, Harmony Gold, Kinross Gold, Pan American Silver, and Newmont all up over 2%. The U.S. dollar has strengthened recently as避险 capital initially favored its liquidity, but if Middle East instability persists, the dollar's peg to oil could weaken, diminishing its strength and making a gold rally inevitable.

At 15:00 on March 4, the fourth session of the 14th National Committee of the Chinese People's Political Consultative Conference opened, marking the start of the 2026 "Two Sessions." Additionally, a press conference for the fourth session of the 14th National People's Congress was held at noon. Spokesperson Lou Qinjian stated that China's economy is advancing under pressure, developing with innovation and quality, supported by the world's largest and most comprehensive manufacturing system, a massive consumer market, and a steadfast commitment to opening-up. China remains an ideal, safe, and promising investment destination for foreign investors.