Denitsa Tsekova and Emily Graffeo
5 min read
In This Article:
(Bloomberg) — It’s the kind of geopolitical flashpoint that might once have triggered a full-blown market meltdown: Israeli warplanes struck Iranian nuclear sites, Tehran vowed revenge — then followed through. Oil spiked.
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Yet in a year where crises have come in waves, traders from London to New York opted to hold their breath rather than flee en masse.
Yes — gold climbed, stocks slid and bonds seesawed, but there was no big stampede. The S&P 500 finished the week down modestly and remains less than 3% below its record high. Crude gave back some of its early gains.
That relative calm — for now — followed a familiar playbook: Markets are shocked, prices stumble, then the habitual dip-buyers swoop in. It’s a routine that has been all but cemented after months of crises that never quite landed. That got fresh impetus this week when readings on inflation and consumer sentiment came in better than estimated.
The airstrikes disrupted this trading pattern Friday, without shattering it. And in the end, another Wall Street phenomenon proved equally important in salvaging the week: momentum. From risk premiums in corporate bonds to crypto and stock-market breadth, trends have stayed largely positive — evidence that money managers remain concerned that missing market rebounds this year is a bigger risk than succumbing to the dip.
Now, attention turns to the weekend. With fresh escalation underway, markets are bracing for signals from the Middle East and Washington that could shape next week’s mood — and test how durable the rally reflex really is.
“This has been a year where fading bad news paid off, and the FOMO theme has been growing louder,” said Max Gokhman, deputy chief investment officer at Franklin Templeton Investment Solutions. “When that momentum becomes blind euphoria it can cause bulls to hit a brick wall at full speed, but we aren’t there yet.”
Of course, anxiety abounds, as it has throughout a turbulent year. Israel warned its attacks may go on for weeks, while Iran has vowed to respond forcefully.
Retail buying is also slowing, money is edging into cash and gold, and bonds offered little comfort: the 10-year yield ended higher on Friday, a reminder that traditional havens are no sure thing as fiscal clouds gather.
