US equities have fallen less than during past oil shock events, with risk assets described as holding up better than previous episodes. The S&P 500 and Europe\u2019s STOXX 600 are 5\u20136% below their record highs.<\/p>\n
Recent US data includes the March jobs report, the first covering the period since strikes began on 28 February. Nonfarm payrolls rose by +178k, the strongest in 15 months, and unemployment edged down to 4.3%.<\/p>\n
The article refers to earlier periods of market stress after oil shocks, including 1979\u201380, 1990\u201391 and 2022, where drawdowns were followed by fairly quick recoveries. It notes that in 1979\u201380, markets were unsettled as Paul Volcker raised rates sharply and a US recession occurred in early 1980.<\/p>\n
It also points to 2022, when global central banks raised rates aggressively during a bear market. That period was followed by a strong rebound in 2023, with the S&P 500 reaching a new record by early 2024.<\/p>\n
Given the market’s current strength, we see a disconnect between risk assets and the reality of the ongoing oil shock. With tensions in the Strait of Hormuz recently pushing Brent crude past $105 a barrel, the S&P 500 is still hovering around 5,700, just 5% off its all-time high. This suggests the market is betting on a short-lived conflict, creating a specific opportunity for traders.<\/p>\n
This resilience, reflected in a VIX that remains below 18, makes protective strategies relatively inexpensive. Traders should consider buying put options on major indices like the SPX or SPY as a hedge against a sudden shift in sentiment. If the conflict escalates or economic data falters, these positions offer valuable insurance against a market that is currently priced for a best-case scenario.<\/p>\n
We have seen this script before, such as the market turbulence in 1979 or the sharp drawdown in 2022, which were both followed by strong recoveries. The bounce back we saw in 2023 that led to new records in early 2024 reinforces the idea that recoveries can be swift. However, this history also reminds us that the initial drawdowns can be painful for those who are unprepared.<\/p>\n
The strong economic memory from last year, like the March 2025 jobs report that showed nonfarm payrolls at a 15-month high, is supporting current optimism. But more recent data from last week showed initial jobless claims ticking up to 225,000, and the latest CPI reading was a bit sticky at 3.1%. While central banks are still signaling a dovish stance, this could change quickly if inflation doesn’t cooperate.<\/p>\n
Considering this complacency, traders could look at volatility itself as an undervalued asset. Buying call options on the VIX provides a direct wager that the current calm will not last. This strategy is a targeted way to position for a potential market correction if the optimistic outlook on the geopolitical situation and the economy proves to be wrong.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US equities show resilience versus past oil shocks; payrolls surged, while S&P 500 remains near record highs.<\/p>\n","protected":false},"author":103,"featured_media":16993,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-46884","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=46884"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46884\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16993"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=46884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=46884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=46884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}