Geopolitical tensions reignite, global markets revisit the 2022 playbook in search of safe havens

⑴ The outbreak of war in the Middle East has triggered a major shock in the energy market, with investors seeking guidance by comparing the market response to the 2022 Russia-Ukraine conflict. The chief economist at wealth management firm Forvis Mazars pointed out that the ongoing global trade war already poses potential inflationary pressure, and the surge in oil prices will further intensify this situation.⑵ Volatility in the crude oil market is approaching 2022 levels. Brent oil prices have soared by about 40% in two weeks, nearing the $120 mark on Monday, while the increase during the same period in 2022 was 15%. William Blair's macro analyst believes that global oil supply has shifted from the "frictionless" state of the past decade to a new normal of continuous shocks. The US Dollar Index has also strengthened, rising 2.6% since the outbreak of the conflict, matching the increase seen in 2022.⑶ However, the performance of safe-haven assets is completely different from 2022. The yield on Germany's 10-year government bonds has jumped by 30 basis points, whereas it fell by more than 10 basis points during the same period four years ago. The market is digesting inflation expectations much faster, but the eurozone's 5-year forward inflation swap remains stable around 2.18%, close to the ECB's target. Gold has uncharacteristically fallen by about 3%, compared to a nearly 8% rise in 2022. Royal Bank of Canada strategists analyzed that, due to the crisis's stronger direct link to the energy market, investors' demand for "universal hedging tools" has weakened.⑷ European stock markets have replicated the decline from four years ago, but the drop has been halved. The STOXX 600 index has fallen 5% in two weeks, much less than the 10% drop in 2022. Barclays strategists estimate that if oil prices remain around $100, the index could fall to 550 points, about 13% below the pre-war closing. It is worth noting that European stock markets were at historic highs before the conflict, benefiting from capital flows from the US and supportive stimulus policies, whereas in 2022, the market had already priced in expectations of the Russia-Ukraine conflict.⑸ Volatility indicators show divergence. The CBOE Oil Volatility Index has surged to a five-year high of 120%, surpassing the 2022 peak of 102%. However, overall stock market volatility, as measured by the VIX index, is around 25, far below the 60 seen in April 2025; the bond market MOVE index has risen to 95, still below the early March 2022 level of 140; and foreign exchange volatility remains basically unchanged.