Last month, the Dow Jones Industrial Average in the United States first broke through the 50,000-point mark, and the Straits Times Index in Singapore also rose above 5,000 points.
Since the beginning of the year, despite frequent geopolitical events, from the U.S. capturing Venezuelan President Maduro to controversies surrounding Greenland, the stock market has continued to rise.
However, the strong market that emerged shortly after the U.S. &#34;Liberation Day&#34; tariffs hit a sudden brake with the outbreak of the conflict in Iran last week. In just a few days, market sentiment shifted from initial calm observation to panic selling, followed by a strong rebound the next day, making the market feel like a roller coaster. Over the past week, the Straits Times Index fell by 3%, briefly dropping below 4,800 points, while the S&amp;P 500 Index in the U.S. fell by 2%, marking its worst weekly performance since October last year.
Last year, the market rebounded several times from lows and reached new highs thanks to the TACO (Trump always chickens out) trade.
Can TACO save the market this time? Will the optimistic predictions made at the beginning of the year for the Straits Times Index to reach 6,000 points and the S&amp;P 500 Index to exceed 7,000 points still hold?
<h3>Oil Price Predictions Even Reached $200</h3>
Currently, there are two views in the market. One is that geopolitical conflicts will eventually pass; for example, despite the Russia-Ukraine war lasting more than three years, the market has still reached new highs after experiencing multiple fluctuations. Last year, despite a series of geopolitical tensions suppressing risk sentiment, the market still rose, indicating that geopolitical events typically do not have a long-term negative impact on stock prices.
The other view is that investors have become accustomed to the assumption that &#34;geopolitical events create entry opportunities,&#34; and their perspective on conflicts may be overly complacent. If hostilities continue, the market will face significant repricing risks.
There are historical precedents for this. During the Gulf War in 1990, from the invasion of Kuwait by Iraqi forces to the U.S.-led coalition's confrontation with Iraq, the S&amp;P 500 Index fell nearly 20%.
This time, with the sudden deterioration of the situation in the Middle East, market predictions for oil prices have also been rapidly adjusted. Some expect oil prices to rise to $90 per barrel, others are calling for $100, and more aggressive predictions even reach $100 to $150, with extreme cases potentially touching $200.
Missiles and drones not only impact crude oil production but also hinder smooth transportation after production. Another major reliance for Asian energy—liquefied natural gas—also faces shipping disruptions, with the costs of LNG carriers already doubling.
Several major global marine insurance companies have canceled war risk insurance for routes including the Strait of Hormuz and the Arabian Gulf since March 5.
Even if the Strait of Hormuz is not fully blocked, the war risk premium will raise freight costs and extend shipping times. Such shocks often first manifest in corporate profits and wholesale sectors, and then seep into inflation through service and food prices.
Most Asian economies had previously emerged from the shadow of high inflation in 2022, with policy discussions shifting from &#34;anti-inflation&#34; to &#34;stabilizing growth.&#34; However, if oil prices and freight rates hover at high levels for several months, imported inflationary pressures will quickly return to the table
About 45.7% of Asia's crude oil imports and 29.5% of gasoline are transported through the Strait of Hormuz, higher than the global rate of 20%.
<img src="https://imageproxy.pbkrs.com/https://dss0.zbstatic5.com/s3fs-public/articles/2026/03/08/2026-03-02T150320Z2048295236RC29WJAWK8YDRTRMADP3IRAN-CRISIS-OMAN-HORMUZ.JPG/query-MTAyNQ?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://dss0.zbstatic5.com/s3fs-public/articles/2026/03/08/2026-03-02T150320Z2048295236RC29WJAWK8YDRTRMADP3IRAN-CRISIS-OMAN-HORMUZ.JPG/query-MTAyNQ"/>
Even if the Strait of Hormuz is not fully blocked, the war risk premium will raise freight costs and extend shipping times. (Reuters)
Mitsubishi UFJ Financial Group estimates that for every $10 increase in oil prices, the overall inflation rate in Asia could rise by about 0.1 to 0.9 percentage points, with Singapore's inflation rate potentially increasing by more than 0.3 percentage points. Approximately 95% of Singapore's electricity relies on natural gas, half of which is liquefied natural gas.
Last year, Singapore's core inflation rate fell to 0.7%, down from 2.8% the previous year, and is expected to be between 1% and 2% this year. However, forecasts for global oil prices may vary. Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong stated in Parliament that in the short term, global energy prices may rise, increasing costs for businesses and consumers, and putting pressure on the global and Singaporean economies, depending on how long the conflict lasts, and that economic forecasts will be reassessed if necessary.
<h4>Further Reading</h4>
Shen Yue: The Soul-Searching Question of Shein's Big U Turn

 Chen Ziyun: The Concentration of Wealth and Slowing Social Mobility, Can the Singapore Dream Still Be Realized?


The risk of rising prices is not limited to Asia; Jamie Dimon, CEO of JPMorgan Chase, warned that &#34;the risk of inflation being higher than market expectations does exist.&#34;
&#34;If it happens, it will be as disappointing as a skunk suddenly crashing a party.&#34;
<h3>The Financial Market Shows Signs of Weakness</h3>
The market currently widely expects that unless inflation significantly cools, the U.S. Federal Reserve may remain inactive for most of 2026, while geopolitical risks are also increasing. If the Fed slows down its interest rate cuts, it would be detrimental to growth stocks and technology stocks.
Analysts are also wary of the risk of &#34;stagflation,&#34; where rising tensions undermine corporate and consumer confidence, leading to declines in investment and consumption, dragging down economic growth, while high oil prices keep global inflation elevated.
However, this time, investors may not be able to wait for Trump's TACO to save the market. Some analysts believe that wars tend to develop with their own inertia, and &#34;saving the market&#34; may not be as easy as it was after 'liberation day,' when Trump essentially had complete control over policy choices.
In fact, before the situation in the Middle East deteriorated, the global financial market had already shown some signs of weakness.
The rapidly developing private credit market over the past few years is like a &#34;cockroach.&#34; The U.S. auto parts supplier First Brands and the subprime lender Tricolor, which responded to private credit, both went bankrupt last year. Jamie Dimon remarked at the time, &#34;When you see one cockroach, there are likely many more... Everyone should be vigilant about this.&#34;
<img src="https://imageproxy.pbkrs.com/https://dss0.zbstatic5.com/s3fs-public/articles/2026/03/08/2026-02-25T023047Z295505051RC2KSJA1BF30RTRMADP3BLUE-OWL-CAPITAL-FUNDS.JPG/query-MTAyNQ?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://dss0.zbstatic5.com/s3fs-public/articles/2026/03/08/2026-02-25T023047Z295505051RC2KSJA1BF30RTRMADP3BLUE-OWL-CAPITAL-FUNDS.JPG/query-MTAyNQ"/>
The U.S. alternative investment asset management company Blue Owl Capital allowed investors to redeem 17% of its net assets in the most recent quarter; another fund managed by the company decided to suspend quarterly redemptions and instead return funds through regular distributions, causing a stir in the financial industry. (Reuters)
Not long ago, an American alternative investment asset management company named Blue Owl Capital allowed investors to redeem 17% of its net assets in the most recent quarter; another fund managed by the company decided to suspend quarterly redemptions and instead return funds through regular distributions, causing a stir in the financial industry.
Two other alternative asset management companies subsequently made cash acquisition offers for shares in three of Blue Owl Capital's funds, with discounts of up to 20% to 35%.
In recent days, investors in Blackstone's flagship private credit fund redeemed a record 7.9% of the redemption amount, exceeding the fund's usual 5% quarterly limit, highlighting the latest signs of unease in this industry facing a wave of redemptions.
In recent quarters, due to market concerns about the disruption risks posed by artificial intelligence to this asset class and the software businesses it invests in, redemptions across the industry have increased, and new fundraising from retail investors has noticeably slowed. UBS expects the default rate in private credit to potentially soar to 15%
A major mortgage company in the UK, Market Financial Solutions, collapsed last Friday, involving Wall Street banks with hundreds of millions of dollars in exposure, raising concerns about more &#34;cockroaches&#34; appearing in the market.
For ordinary investors, most of these private credit names are unfamiliar. Just like when the two highly leveraged hedge funds of investment bank Bear Stearns collapsed in 2007, many people were indifferent, as the stock market was at historical highs at that time.
At the same time, the risks of artificial intelligence potentially disrupting certain industries and doubts about the sustainability of capital expenditures have not faded.
In a financial market already showing signs of fragility, could the situation in the Middle East become the &#34;last straw that breaks the camel's back&#34;?
Currently, even the most experienced investment experts and analysts believe that the situation is too volatile, with too many unknowns. Their investment advice? It sounds quite cliché: diversify investments and adopt a long-term perspective. But as financial history has repeatedly proven, cliché advice is often the hardest to implement seriously

.SPX

In the current geopolitical tension, investors' views on the market are divided into two camps. One camp believes that geopolitical conflicts will not have a long-term impact on the stock market, and that the market will continue to rise amidst volatility; the other camp is wary of the risks that ongoing conflicts may lead to a repricing of the market. Recently, market sentiment has fluctuated sharply, with the Straits Times Index and the S&P 500 Index both experiencing declines, and investors are adopting a cautious attitude towards future trends

- Last month, the Dow Jones Industrial Average exceeded 50,000 points, while Singapore's Straits Times Index reached 5,000 points, despite geopolitical tensions impacting market sentiment.  
- Recent events, particularly the escalation in Iran, led to a sharp market downturn, with significant drops in various indices, raising concerns over high oil prices and inflationary pressures across Asia.  
- Analysts warn that ongoing geopolitical tensions could result in stagflation, affecting consumer and corporate confidence, while highlighting vulnerabilities in the financial markets exacerbated by unpredictable conditions.

Zaobao

VG S&P 500

Hu Yuanwen: Under the flames of war, can the market continue to "buy on dips"? | Lianhe Zaobao