The current geopolitical shakeups are currently impacting the global financial domain, with the stock markets being vulnerable to the ongoing onslaught. The US-Iran conflict, alongside the closure of the Strait of Hormuz, has led to oil price spikes, making investors sensitive towards the domain in general. In addition to this, analysts are now warning that the upcoming week might be particularly sensitive to major changes and transformations. What is this development all about? Let’s explore it in depth.
Also Read: Iran May Let Tankers Pass Hormuz Only if Oil Is Sold in Chinese Yuan
Stock Market Headwinds Ahead
Per the latest MarketWatch report, two key market indicators are now flashing a selling signal for the stock market ahead. The CBOE index, also referred to as the VIX, has given a 10-point wider reading as compared to the S&P 500. Also known as the Wall Street “fear gauge,” the index measures the expected volatility of the US stock market in the last 30 days. When this index is higher, it means that the investors are buying protection options, driven by a sense of market fear or a looming market drop.
“But what you’re seeing is still a lot of uncertainty when it comes to the outcome and the duration of the [Iran] war and what it is going to mean for inflationary pressures,” Mulberry said.
The next week can be crucial for the markets, as macro events are currently dictating the domain. Any unpredictable escalation between Iran and the US war may end up upsetting the world order, with the markets ending up in a brief disarray. Rising oil prices are also weighing on the US economy, gripping the stock market with fears of inflation and possible interest rate uncertainty.
Investors’ Top Choice: Oil ETFs
The stock market domain is currently banking on the rising oil price narrative. With the Strait of Hormuz being closed, the oil prices are up $100/barrel, with investors exploring oil stock options to make the most out of the current scenario.
Per the latest update shared by the global market investors, the United States oil fund USO has attracted the largest inflows as of now. Moreover, daily retail purchases in USO have surged nearly $30M, surpassing expectations.
“Retail investors are going all-in on oil. The United States Oil Fund ETF, $USO, attracted the largest inflows EVER, according to JPMorgan. Daily retail purchases in $USO surged to over $30 million, surpassing anything seen in years.”
In addition to this, the portal shared how institutional investors are also dumping S&P 500 futures as geopolitical tensions continue to diversify.
‘Institutional investors are dumping S&P 500 futures at a historic pace. During March 3-10, asset managers sold -$36.2 billion in S&P 500 futures, the largest weekly sale in over 10 years, according to Commitment of Traders data. This dwarfs the selling seen during the 2020 CRASH and the 2022 bear market. As a result, their net long positioning is down to ~$305 billion, near the lowest since September. By comparison, the April 2025 low was ~$205 billion. Is this peak bearishness, or is the worst yet to come?”
Also Read: Markets Misreading Gold Price Again? Analysts Point to Bigger Trend
