'You can't press pause': US stocks back to falling amid ongoing war

On March 24, the main U.S. stock indices opened with a decline - such results they demonstrated after the rally during the previous session amid renewed hopes for a speedy resolution of the conflict in the Middle East. However, on March 24, many market participants agreed that it is still too early to talk about the end of the war - moreover, this scenario does not yet take into account the long-term consequences of hostilities, Bloomberg writes.

Such sentiments led to the fact that the broad index of U.S. stocks S & P 500 after growth of more than 1.5% on the eve of March 24 opened in the minus by 0.53%, technological Nasdaq Composite in the first minutes of trading lost 0.49%, industrial Dow Jones fell by 0.71%.

The Wall Street Fear Index (VIX) rose above 27 points (any value above 20 indicates increased volatility in the market).

Brent crude oil Mark is trading at $103.3 per barrel (up 3.4% from the previous close). April futures for WTI are up 4.6% to more than $92.

- "You can't just press pause when oil supplies are hampered," Jim Crane, a researcher at the Baker Institute at Rice University, commented on the situation to Bloomberg - the expert has been following Middle East energy for more than two decades, the agency points out. "Disruption of oil supply chains of this magnitude causes a chain reaction around the world," he added.

Fatih Birol, executive director of the International Energy Agency (IEA), estimates that more than 40 energy facilities in nine Middle Eastern countries have suffered "serious or very serious" damage as a result of the war that began almost a month ago, Bloomberg notes. According to Birol, the potential damage could mean that disruptions in energy supplies will persist after the conflict ends.

Full recovery of oil production after suspension of operations at a small field can take two to three weeks, said Aditya Saraswat, Rystad Energy's research director for the Middle East and North Africa, while at a larger field the process can take four to five weeks, he said (quoted by Bloomberg), emphasizing that a rush to resume operations could cause damage.

- "Unlike the situation with [U.S. President Donald Trump's] duties or Greenland, there are many parties interested in how this war ends, and it is likely to be the ships, not the slogans, that will be crucial to physical markets," said Helima Croft, head of global commodity strategy at RBC Capital Markets (quoted by Bloomberg).

- Tony Sycamore, a market analyst at IG, agrees: "Trump can say whatever he wants, but the Strait of Hormuz is closed and will remain closed until there is a consensus in Iran [on ending the conflict], and that's where we have a problem," he said (quoted by Reuters).

- "Most people I talk to are very concerned about the duration of this conflict," Tony Pasquariello, global head of hedge funds at Goldman Sachs, wrote in a note to clients. - The market has not yet factored in the significant reduction in growth expectations," he added.

- At the same time, Scott Rubner of Citadel Securities believes that the stock market is ready to grow if tensions in the Middle East subside. Many hedge funds are actively taking short positions in exchange traded funds (ETFs) to hedge against further declines. If tensions in the region ease and volatility decreases, these positions could be closed quickly, he pointed out.

This article was AI-translated and verified by a human editor