---
title: "Latest Key Risk in US Stocks: Beware of Escalation in Middle East Situation!"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/100204947.md"
description: "If geopolitical uncertainties escalate further, any relief rebound in the US stock market before the end of the year will be short-lived! Should we enter or exit?"
datetime: "2023-10-18T08:58:04.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/100204947.md)
  - [en](https://longbridge.com/en/news/100204947.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/100204947.md)
---

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# Latest Key Risk in US Stocks: Beware of Escalation in Middle East Situation!

According to the Zhongtong Finance APP, Goldman Sachs has stated that if geopolitical uncertainties escalate further, any potential stock market rebound will face risks.

Currently, the market is generally concerned that the prolongation of the Israel-Hamas conflict may impact oil supply and suppress demand for risk assets. At the same time, investors remain concerned about the direction of monetary policy and the rising bond yields.

Although new geopolitical risks may bring "some relief" to interest rates and increase the possibility of central banks adopting more moderate policies, Goldman Sachs' team, including Cecilia Mariotti, wrote in a report on Wednesday, "Long-term geopolitical uncertainties, coupled with ongoing inflationary macro environment, may eventually trigger concerns about economic growth."

In this context, the bank's strategists expect any relief rebound in the stock market before the end of the year to be temporary.

It is not just Goldman Sachs warning that geopolitical risks may pose a threat to the market. Morgan Stanley strategist Marko Kolanovic stated this week that investors should seek safe investments as the escalation of geopolitical tensions caused by the Middle East conflict is another unfavorable factor for risk assets and economic activity.

However, so far, the market has been very calm, and since the conflict began, the S&P 500 index has seen substantial gains. The VIX volatility index, which reflects US volatility, remains at a low level and has been below 20 points for over 100 consecutive days, the longest duration in five years.

![image.png](https://pub.pbkrs.com/uploads/2023/dd6d5939b734be00f8a02a60a15362dd?x-oss-process=style/lg)

Furthermore, despite the risk of escalation in the Middle East conflict, Wall Street traders are still focused on the soaring US Treasury yields and the profit trajectory of US companies, and the hedging demand from traders remains limited.

Benjamin Melman, Global Chief Investment Officer of Edmond de Rothschild Asset Management, stated, "Investors are more inclined to stay on the sidelines and see how things develop rather than overreact. This may be a symbol of wisdom. But this indicates that we must be prepared to see strong trends when the direction becomes clearer."

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