U.S. stock index futures fell across the board in pre-market trading on Thursday, March 26. At the time of writing, Dow Jones futures were down 0.58%, S&P 500 futures declined 0.64%, and Nasdaq futures dropped 0.77%. In European markets, Germany's DAX index fell 1.06%, the UK's FTSE 100 dropped 1.04%, France's CAC 40 decreased 0.72%, and the Euro Stoxx 50 declined 1.10%. WTI crude oil rose 3.17% to $93.18 per barrel, while Brent crude increased 3.26% to $100.43 per barrel.
Market sources indicate the U.S. Department of Defense is preparing military options for a potential major conflict with Iran. According to reports from two U.S. officials and two informed sources, the Pentagon is developing plans for a "decisive strike" against Iran that could involve ground troops and large-scale bombing operations. Officials familiar with internal discussions described four primary military options under consideration: invading or blockading Kharg Island; invading Larak Island to reduce Iranian control over the Strait of Hormuz; occupying the strategic Abu Musa island and two smaller islands near the western entrance to the strait; and intercepting or seizing vessels carrying Iranian crude oil near the eastern exit of the Strait of Hormuz. The U.S. military has also prepared plans for ground operations deep inside Iran aimed at controlling enriched uranium buried within nuclear facilities.
Iran's ambassador to Japan delivered a strong statement that the United States has no right to unilaterally impose a peace plan. Ambassador Peiman Saadat stated Thursday that America cannot single-handedly force a peace solution on Iran, with conflicting negotiation signals from both sides and no clear end to regional hostilities. "He cannot present a peace plan and declare 'I will enforce it'," Saadat said in Tokyo, referring to President Trump. "Unilateral imposition is completely unacceptable." While Iran has publicly rejected U.S. peace proposals and presented its own new conditions for ending the conflict, the White House maintains that peace negotiations are ongoing. "The aggressor absolutely cannot unilaterally decide or fabricate solutions," Saadat emphasized after meeting with Japan's pro-Iran parliamentary league. "The final decision-making authority lies not with the United States, but with Iran."
Former Goldman Sachs CEO Lloyd Blankfein warned investors against excessive optimism about Middle East tensions. The Goldman Sachs senior chairman cautioned that even if the Iran conflict were "resolved tomorrow," the damage would "continue to persist," urging investors to prioritize contingency planning during the turmoil. Blankfein stated in a Wednesday interview that some market participants might be too optimistic about the conflict, noting that betting on "everything eventually settling down" is as dangerous as assuming "the conflict will never be resolved." Regarding the Middle East situation, he commented: "Everyone understands that even if hostilities cease tomorrow, the severe damage to infrastructure would continue to pressure markets for much longer. Furthermore, there are currently no signs indicating the conflict will see a turnaround in the near term."
Global infrastructure asset management firm IFM Investors warns that massive spending on artificial intelligence could trigger inflationary pressures. CEO David Neal stated that enormous expenditures in AI and global energy transition might create inflation pressures over coming decades. "Investors should pay more attention to inflation issues, not just because of soaring energy prices," Neal said. While recent energy price spikes serve as a "wake-up call," other structural pressures are at work. "Massive capital is flowing into areas like artificial intelligence and energy transition. This itself represents an inflationary pulse, and this trend will continue for decades," he added.
Morgan Stanley has raised concerns about a "bull trap," warning that markets are underestimating the Middle East war's negative economic impact while the dollar's rally appears unsustainable. The firm suggests the dollar will weaken as interest rate differentials between the U.S. and Europe narrow and Middle East conflicts suppress economic growth. Since the February 28 U.S.-Israel strike on Iran, the dollar has strengthened due to its safe-haven status and position as the currency of the world's largest energy producer. A dollar index has risen 2% since the conflict began, reaching its highest level since December on Monday. Meanwhile, the euro and yen have both fallen more than 2% during the conflict, as both countries rely heavily on Middle East energy supplies.
In corporate news, Jefferies Financial Group reported weaker-than-expected first-quarter results despite record investment banking revenue, with the stock down 36% year-to-date. Although the bank posted its strongest first quarter ever for investment banking, earnings of 70 cents per share missed analyst estimates of 87 cents due to losses from credit investments. The results included $17 million in losses related to recent credit risk events involving Market Financial Solutions and First Brands Group. Revenue grew 26% to $2.017 billion year-over-year, with net income increasing 22% to $155.7 million, boosted by a 45% surge in investment banking revenue driven by increased transaction volumes across multiple sectors.
Autonomous vehicle company Pony.ai projects its Robotaxi revenue will double by 2025, achieving profitability per vehicle in two cities and expanding to over 20 cities domestically and internationally by 2026. The company reported total 2025 revenue of 629 million yuan, a 20% increase marking four consecutive years of growth. Pony.ai expects its Robotaxi fleet to exceed 3,000 vehicles by the end of 2026. Robotaxi business entered a period of explosive growth in 2025, with full-year revenue reaching 116 million yuan, a 129% increase year-over-year, including a nearly 400% surge in passenger fare revenue. Fourth-quarter Robotaxi revenue was 46.6 million yuan, accounting for approximately 40% of full-year Robotaxi revenue, with passenger fare revenue growing over 500% year-over-year.
The Middle East conflict has extended to package delivery, with the U.S. Postal Service proposing an 8% surcharge on certain packages to address soaring fuel prices. The USPS announced Wednesday it seeks to implement a temporary fuel surcharge on package and expedited mail services in response to rising transportation costs, including oil price increases resulting from the Iran war. The adjustment would apply to Priority Mail Express, Priority Mail, USPS Ground Advantage, and select package services, while regular stamps and other mail services would remain unaffected. If approved by the Postal Regulatory Commission, the surcharge would take effect April 26 and continue through January 17, 2027. Major package carriers FedEx and UPS have charged fuel surcharges on packages for years. Oil prices have risen over 40% since the U.S.-Israel attack on Iran.
Google's new compression technology has triggered concerns about storage chip demand, though analysts point to Jevons Paradox suggesting efficiency gains may ultimately increase demand. Computer memory and storage product stocks declined significantly after Google researchers promoted new compression technology that reduces memory requirements for large language models and vector search engines. In South Korean markets, AI memory chip maker SK Hynix fell up to 6%, while Tokyo-listed flash memory manufacturer Kioxia Holdings dropped 4.4%. Similar declines occurred Wednesday for Micron Technology and SanDisk in New York markets. However, bulls maintaining optimism about the storage chip market's strong performance suggest efficiency improvements could increase rather than decrease demand—an economic phenomenon known as Jevons Paradox.
Key economic data and events scheduled for release include U.S. initial jobless claims for the week ending March 21 at 8:30 PM Beijing Time, the Federal Reserve's balance sheet as of March 25 at 4:30 AM Beijing Time the following day, and a speech on financial stability by Fed Governor Lisa Cook at 4:00 AM Beijing Time the following day.
