Catenaa, Monday, March 02, 2026- Morgan Stanley sees the eruption of conflict in Iran and the Middle East as unlikely to derail their bullish view on US stocks, until huge spikes in oil prices.
Geopolitical risk events historically haven’t resulted in sustained volatility for US equities, the Morgan Stanley team led by Mike Wilson wrote in a note, citing the average performance of the S&P 500 index in months following such episodes.
In terms of the latest Iran conflict, the bear case stems from a sharp and persistent rise in oil prices, which could compromise what the strategists see as a strengthening business cycle, the strategists said.
“Unless oil prices spike in a historically significant manner and remain elevated, recent events are unlikely to change our bullish view on US equities over the next 6-12 months,” they wrote.
US equity markets are poised to open for the first time since the weekend’s US and Israeli strikes on Iran, with hostilities escalating across the region.
It has already been a challenging start to the year for the S&P 500, with US stocks out of favor relative to international peers amid concerns that include artificial intelligence disruption and the impact ofthe Trump administration policy.
Oil prices on Monday surged the most in four years as traders assessed the effective closure of the Strait of Hormuz and the halting of a big refinery in Saudi Arabia.
European equities fell by the most since November, driven by declining travel, retail, and luxury stocks. Shares also fell sharply in Asia.
For Wilson, healthcare remains the preferred defensive play, as cheap valuations, improving earnings and fading policy overhangs have helped attract broader investor interest.
