Global tensions and markets: what you actually need to know

We hear all kinds of contradictory things about the impact of current conflicts. Frankly, there is a massive gap between propaganda and actual prices. Let me explain how the markets are really reacting today.

The geopolitical context

Basically, we are on day 13 of the conflict. Tensions remain quite high. Iran recently hit two oil tankers in Iraqi waters. So, the Strait of Hormuz is more or less blocked. Well, mostly for Western ships, anyway. Chinese boats, on the other hand, seem to pass through without any issue. As a result, it is a real double standard.

The real tension: the energy market

The main concern today is the price of a barrel of oil. Currently, it is hovering around $92. In fact, it's mostly the Asian markets that are stressing out. China was buying a lot of Iranian oil at a hefty discount. Now, that is going to cost them much more. To calm things down, 400 million barrels have been released. This is a strategic reserve managed by the International Energy Agency. It represents about three weeks of normal consumption.

The state of the markets in 4 points

1. Bitcoin and Gold: Bitcoin is stagnating around $70,000. However, gold has lost about 6% since its peak. It dropped back down to around 5,100. In short, the situation isn't that alarming.
2. The Nasdaq: After a massive 4% increase, it is stalling out. This is a true classic. When the market goes up too fast, the next day is super quiet.
3. The Dow Jones and the DAX: They are quite weak. But they are stabilizing at the lows of the week. Nevertheless, they are not the most reassuring indices.
4. The CAC 40: It is slightly under 8,000 points. Honestly, it's often the worst performer of the group. It drops very fast and struggles hard to climb back up.

A reflection of the moment

The overall reaction looks a lot like classic human nature. Essentially, primal survival takes over. It's a bit like our ancestors who had to hunt woolly mammoths. People are worried about paying more for their gas. The rest of the geopolitics usually feels too distant to them.

A slight nuance

In my view, we must remain very cautious. Some media outlets are sharing predictions of a $200 barrel. That is mostly to play on our fears and sell ads. The recent drop in gold proves that the anxiety remains manageable. It is expected that market inertia will quietly regain the upper hand.

Conclusion

To sum up, the asymmetry between media noise and the charts is massive. Keep a rigorous mental framework and ignore the global hype. Take care, and I will see you tomorrow to analyze the markets.

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