Since the outbreak of the Iran war, global stock markets have come under pressure, but the selling intensity is far less than similar historical shocks. Supporting investors to remain on the sidelines are three deeply rooted beliefs: the war will not last long, private credit will not trigger a systemic crisis, and policymakers will eventually step in to support the market.The S&amp;P 500 index in the U.S. has fallen by more than 3% since the conflict began, while the European Stoxx 600 index has seen a slightly deeper decline but has stabilized. Notably, less than 20% of stocks in developed markets are technically in an oversold state, and the scope for profit-taking remains limited, with even small-scale buying on dips occurring last week.Bank of America strategist Michael Hartnett's team attributes this phenomenon to the market positioning still leaning bullish—the consensus believes the war will not last too long, private credit does not pose systemic risks, and policymakers have historically supported Wall Street.However, Barclays strategists warn that market nerves are increasingly frayed. “Investors still believe in the existence of Trump put options, which is why the global stock market's decline is less severe than past oil shocks,” they stated, “but the longer the blockade of the Strait of Hormuz lasts, the more pronounced the market's stagflation characteristics will become.” This week, the Federal Reserve, European Central Bank, Bank of Japan, and Bank of England will hold consecutive monetary policy meetings, and with oil prices hovering around $100 per barrel, the policy statements from central banks will be closely scrutinized by the market.<h2>Why Has the Sell-off Not Yet Occurred</h2>From a market structure perspective, the release of risk-averse sentiment in this round has shown clear selectivity. The Bank of America team points out that capital outflows are mainly concentrated in high-yield bonds, emerging market debt, and financial stocks, while the overall positioning at the large-cap level has not triggered a &#34;bear market panic&#34; sufficient to signal contrarian buying.Bank of America believes that an adjustment typically requires three conditions to be met: oversold assets hitting bottom, overbought assets being sold off, and safe-haven assets no longer being sought after. &#34;This sequence is evolving, indicating that once policymakers respond, the selling pressure should quickly ease,&#34; the team stated.Meanwhile, the sharp rise in market hedging demand also reflects deep-seated anxiety among investors. Liquidnet Alpha cross-asset sales expert Anthony Benichou pointed out that the VIX skew relative to at-the-money volatility is nearing historical highs, indicating that the market is paying a high premium for tail risk, which is a classic sign of &#34;extreme pessimism.&#34; However, he also warned that forced deleveraging and systemic capital flows could still create severe volatility in both directions.<h2>Policy Response Becomes a Key Variable</h2>The current situation has shown a clear binary divergence: if oil prices surge and then quickly retreat, inflationary pressures will be viewed as temporary, and the impact on growth will remain mild—Barclays strategists believe that in this scenario, central banks may choose to temporarily set aside concerns about rising prices, which would ultimately benefit risk assets. Conversely, if both inflation and growth come under pressure, and the economy faces recession risks, the stock market will face greater downward vulnerability.Political pressures are also not to be overlooked. The impact of war on inflation and the cost of living may force the U.S. government to seek a quick resolution to the conflict before the midterm elections. Meanwhile, the policy space for central banks is also narrowing—the swap market has fully priced in expectations for European rate hikes, all expectations for rate cuts in the UK have been withdrawn, and expectations for rate cuts in the U.S. have also begun to be reduced&#34;We are currently in a phase where investors are examining potential policy responses,&#34; said Benoit Peloille, Chief Investment Officer of Natixis Wealth Management. &#34;If the conflict lasts longer, central banks will also respond in some form, although we are not there yet.&#34;

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After the outbreak of the conflict in Iran, global stock markets faced pressure but did not collapse—the S&P 500 fell by less than 3%, with bargain hunters quietly entering the market. The threefold belief supporting investors to hold their positions is: the war will not last long, private credit does not pose systemic risk, and policymakers will eventually step in to support the market. However, Barclays warns that the longer the blockade of the Strait of Hormuz lasts, the greater the risk of stagflation; the VIX skew is approaching historical highs, and the market is paying a high premium for tail risks. This week, the four major central banks will hold meetings, and with oil prices below $100 per barrel, policy statements will become the key to pricing

- Since the outbreak of war in Iran, global stock markets have faced pressure, but the sell-off has been less severe than similar historical events.  
- U.S. stock indices like the S&P 500 have dropped over 3%, while investors remain relatively stable due to beliefs that the conflict will be short-lived and that policymakers will intervene.  
- With inflation concerns and potential economic impacts looming, the market awaits central bank policy decisions amid rising oil prices, which could significantly influence risk assets.

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The "three beliefs" supporting the US stock market: the war will not last too long, private credit will not trigger a crisis, and Trump will always save the market