Institution: Middle East conflict severely damages confidence, investors are pricing in the worst-case scenario

According to Golden Ten Data on March 9, the market's optimism for a quick resolution to the Middle East conflict has rapidly faded. In just a few days, investors have shifted from a wait-and-see attitude to decisive action: they have begun to price in deeper and more prolonged supply shocks—shocks that could drive up inflation while squeezing economic growth. Since the outbreak of the Iran war, about 6 trillions USD in global stock market value has evaporated. Although news that the G7 plans to discuss a coordinated release of oil reserves once helped the stock market recover some losses and caused oil prices to give back some gains, Monday's market movements remained dramatic. "The pendulum is swinging toward panic," said Danny Wong, CEO of Areca Capital. "There is a stampede in the market to sell or reduce all kinds of risk assets." "Investors have had to increase their assessment of the probability of the worst-case scenario," said Rajeev de Mello, Global Macro Portfolio Manager at Gama Asset Management. "The challenge for the market is that this shock has a stagflationary nature."