Deutsche Bank\u2019s Henry Allen says US and European equities have fallen less than during past oil shock periods, with markets appearing to price in a short conflict, firm macro data and still-dovish central banks. The S&P 500 and Europe\u2019s STOXX 600 are 5\u20136% below their record highs.<\/p>\n
US data cited include the March jobs report, the first covering the period since the strikes began on 28 February. It showed nonfarm payrolls rising by +178k, the strongest in 15 months, while unemployment edged down to 4.3%.<\/p>\n
The note refers to earlier episodes when oil shocks coincided with equity drawdowns and later recoveries. Examples include 1979\u201380, when Paul Volcker raised rates aggressively and a US recession occurred in early 1980, and 1990\u201391.<\/p>\n
It also references 2022, when global central banks raised rates aggressively during a bear market. That period was followed by a recovery in 2023, with the S&P 500 reaching a new record by early 2024.<\/p>\n
The article states it was created with the help of an Artificial Intelligence tool and reviewed by an editor.<\/p>\n
We are seeing that risk assets are holding up much better than they did during historical oil shocks. Looking back to the events of early 2025, the S&P 500’s drawdown was surprisingly shallow, with the index staying only 5-6% below its record highs. This pattern of resilience suggests that selling out-of-the-money puts to collect premium could be a viable strategy during any minor pullbacks in the coming weeks.<\/p>\n
This market confidence seems rooted in strong economic fundamentals, which have continued into this year. The latest jobs report for March 2026 showed the economy added a solid 215,000 nonfarm payrolls, keeping the unemployment rate low at 3.8%. This underlying economic strength tends to dampen volatility, which could make shorting VIX futures profitable if the market remains steady.<\/p>\n
We have seen this playbook before, even following more significant downturns. For instance, after the aggressive central bank rate hikes of 2022 led to a bear market, the S&P 500 staged a powerful recovery throughout 2023 and into early 2024. This history supports using any dips as opportunities to establish defined-risk bullish positions, such as buying call spreads, to capture a potential rebound.<\/p>\n
A key factor is that central banks do not appear poised for aggressive tightening like they were in 1980 or 2022. Recent statements from the Federal Reserve indicate a continued pause on interest rates, especially with core inflation now trending just below 3%. This backdrop limits the probability of a sharp, unexpected market shock, providing a favorable environment for strategies that profit from range-bound or slowly appreciating markets.<\/p>\n","protected":false},"excerpt":{"rendered":"
Equities relatively resilient despite oil shock; markets price brief conflict, strong jobs, and dovish central banks.<\/p>\n","protected":false},"author":87,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71],"tags":[],"class_list":["post-44089","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t