# March 5, 2026 — Market Report

Date: 2026-03-05

Day 7 of the war. Iran expanded its attacks across the Gulf — striking a US oil tanker, hitting UAE, Bahrain, Qatar, and Azerbaijan with drones and missiles. The Strait of Hormuz remained effectively closed. US equities fell, but KOSPI staged a historic rebound from yesterday's -12% crash.

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## The War: Day 7 — Regional Escalation

The US-Israeli campaign against Iran intensified further, and Iran escalated its retaliation across the entire Gulf region.

- Iran claimed it struck a US oil tanker in the northern Persian Gulf — ship caught fire
- Drone and missile attacks on UAE, Bahrain (oil refinery), and Qatar
- Strikes on Azerbaijan's Nakhchivan — first attack on a non-belligerent neighbor, drawing Turkish condemnation
- Drones struck a US base in Iraq
- Strait of Hormuz effectively closed: only 5 vessel crossings on March 4
- Trump announced "political risk insurance" for energy tankers and Navy escorts, but ruled out negotiations, demanding Iran's "unconditional surrender"

Behind the scenes, reports of back-channel contacts between Washington and Tehran helped improve overnight sentiment.

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## Tariffs: Auto Exemption

Trump exempted **auto imports** from the Canada/Mexico tariffs until April 2. First carve-out from the 25% tariffs that took effect the prior day. Steel and aluminum tariffs estimated to add ~$1,500 to the cost of a US-manufactured car.

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## Economic Data

| Indicator | Value |
|-----------|-------|
| Weekly Jobless Claims | 213,000 (steady) |
| Q4 Productivity | +2.8% YoY (beat expectations) |
| Q4 Unit Labor Costs | Bigger-than-expected increase |

China's Two Sessions opened: GDP growth target set at **4.5-5%** — the lowest on record since the early 1990s. Budget deficit ~4% of GDP, inflation target ~2%. China is in its 4th year of deflation; real estate investment fell -17.2% last year.

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## US Markets

The Dow plunged over 1,000 points intraday before a late-session relief rally trimmed losses.

| Index | Close | Change |
|-------|-------|--------|
| Dow Jones | 47,954 | -784 pts (-1.61%) |
| S&P 500 | 6,831 | -38 pts (-0.56%) |
| Nasdaq | 22,749 | -58 pts (-0.26%) |

S&P 500 and Dow turned **negative year-to-date**. VIX spiked above 22. Broadcom rose ~3% on a 74% surge in AI chip revenue — the sole bright spot.

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## Oil

Oil surged as the Hormuz closure persisted.

| Benchmark | Price | Change |
|-----------|-------|--------|
| WTI Crude | ~$80-81/bbl | +7-8% |
| Brent Crude | ~$85/bbl | +5% |

RBC's Helima Croft: "We're now facing what looks like the biggest energy crisis since the oil embargo in the 1970s." Full Hormuz closure could eliminate 3.3 million barrels daily. US gasoline prices surged from $2.98 to $3.25 nationwide.

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## Gold

Pulled back modestly from record highs.

| Metric | Value |
|--------|-------|
| Spot Gold | ~$5,080-5,088/oz |
| Intraday Range | $5,092-5,200 |
| Daily Change | -$46 to -61 (-0.9% to -1.2%) |

All-time high remains $5,595/oz (Jan 29). Up ~77% year-over-year. Strong dollar limited upside.

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## Treasuries

| Maturity | Yield |
|----------|-------|
| 2-Year | 3.57% |
| 10-Year | 4.13% (+4.7 bps) |

Oil-driven inflation fears pushed yields higher. Reports of Chinese state banks accelerating US Treasury sales added to yield volatility.

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## Asia: KOSPI Historic Rebound

KOSPI staged a dramatic recovery from the prior session's -12% crash.

| Index | Close | Change |
|-------|-------|--------|
| KOSPI | 5,584 | +490 pts (+9.63%) |
| Kosdaq | 1,116 | +14.1% (largest jump ever) |
| Nikkei 225 | 55,278 | +1.9% |
| Hang Seng | 25,321 | +0.3% |
| CSI 300 | 4,648 | +1.0% |

KOSPI's +9.63% was the second-largest daily gain ever (after Oct 30, 2008's +11.95%) and the largest points gain in history (490 pts). Samsung +11.3%, SK Hynix +10.8%, Hyundai Motor +9.4%. Retail investors led with 1.79 trillion won in net purchases.

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## Currencies

| Pair | Rate |
|------|------|
| USD/KRW | 1,468-1,481 (won strengthened, +8.1 won) |
| DXY | 99.06 (+0.3%) |

Won strengthened alongside the KOSPI rebound, but analysts warned of further weakening to ~1,525 if Middle East tensions persist.

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## The Narrative

March 5 was about **deepening divergence**. Iran expanded strikes across the Gulf, escalating the war from a localized campaign to a regional conflict. Oil surged 7-8% in a single day, and comparisons to the 1973 oil embargo emerged. US equities turned negative for the year.

But Asia produced a dramatic reversal. KOSPI proved the prior day's panic was oversold, staging a historic rebound. This partially restored the bet that the war would end quickly.

For Palace Fund:

1. **Oil is changing the game.** WTI breaking $80 is just the start. If Hormuz stays closed, $100 is a matter of time.
2. **KOSPI rebound is technical.** -12% followed by +9.6% is a net -3.6%. The fundamental risk (energy dependence) is unresolved.
3. **China's Two Sessions:** GDP target of 4.5-5% was priced in. Chinese slowdown adds pressure to Korean exports.
4. **Won timing.** Rebounds bring temporary won strength, but the trend risk is toward weakness. Monitor wire transfer timing.

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## Sources

- [Stocks and News — Market Update March 5](https://stocksandnews.com/market-update/2026/03/05/thurs-march-5-2026/)
- [EconCurrents — March 5 Market Close](https://econcurrents.substack.com/p/05-march-2026-market-close-and-major)
- [CNBC — Oil surges amid Hormuz closure](https://www.cnbc.com/2026/03/06/iran-us-war-oil-prices-brent-wti-barrel-futures.html)
- [CNBC — Gold rises on Iran war](https://www.cnbc.com/2026/03/05/gold-rises-on-iran-war-safe-haven-bid-firm-dollar-limits-upside.html)
- [Korea Herald — KOSPI roars back after crash](https://www.koreaherald.com/article/10687844)
- [CNBC — Asia-Pacific markets](https://www.cnbc.com/2026/03/05/asia-pacific-markets-kospi-hang-seng-index-nikkei-225-china-two-sessions.html)
- [CNN — US-Israel-Iran war update](https://www.cnn.com/2026/03/05/middleeast/us-israel-iran-war-what-we-know-intl-hnk)
- [Al Jazeera — China GDP target below 5%](https://www.aljazeera.com/news/2026/3/5/china-economic-growth-target-set-below-5-for-the-first-time-at-key-meeting)
- [Axios — Strait of Hormuz shutdown](https://www.axios.com/2026/03/05/iran-war-strait-of-hormuz-shutdown-us-global-economy)