Institution: Investors are pricing in the worst-case scenario as Middle East conflict continues to severely impact confidence

BlockBeats News, March 9th, the market's optimism for a quick resolution of the Middle East conflict quickly faded. In just a few days, investors have shifted from a wait-and-see approach to decisive action: starting to price in a deeper, more prolonged supply shock — one that could potentially boost inflation while squeezing economic growth. Since the outbreak of the Iran war, global stock market capitalization has evaporated by about $6 trillion.

Despite the news that the G7 plans to discuss a coordinated release of oil reserves briefly helping the stock market regain some lost ground and oil prices giving up gains, Monday's market trend was still heart-stopping. "The pendulum is swinging towards panic," said Danny Wong, CEO of Areca Capital, "and there has been a stampede to sell off or reduce various risk assets in the market."

"Investors have had to increase their probability assessment of the worst-case scenario," said Rajeev de Mello, Global Macro Investment Portfolio Manager at Gama Asset Management, "The challenge the market faces is that this shock has a stagflationary nature." (FXStreet)