Has the Market Passed Peak Fear? Oil Shock vs Resilient Equities
Has the Market Passed Peak Fear? Oil Shock vs Resilient Equities
Markets may have already priced in peak geopolitical fear, as muted equity reactions contrast with sharp oil spikes and rising bond yields, signaling a transition from panic to structured risk assessment.
Global markets are facing a classic stress scenario: the threat of a blockage in the Strait of Hormuz, through which approximately 20% of global oil supplies pass, has triggered a sharp rise in energy prices, a strengthening dollar, and rising bond yields. However, the key difference in the current situation is the stock market's reaction. Unlike previous crises, stocks are showing muted performance, indicating a possible "peak fear" has been reached.
Since the conflict escalated, oil prices have risen by more than 50%, with WTI crude oil futures surpassing $100 per barrel. The international benchmark, Brent crude oil, has also consolidated above psychologically significant levels. This is a classic inflation shock, which typically leads to a massive sell-off in risky assets. However, the current reaction is different: global indices are declining moderately, and US market futures are down less than 1%.
Since the conflict escalated, oil prices have risen by more than 50%, with WTI crude oil futures surpassing $100 per barrel. The international benchmark, Brent crude oil, has also consolidated above psychologically significant levels. This is a classic inflation shock, which typically leads to a massive sell-off in risky assets. However, the current reaction is different: global indices are declining moderately, and US market futures are down less than 1%.
Has the Market Passed Peak Fear? Oil Shock vs Resilient Equities
This divergence between oil and stock prices reflects a shift in investor behavior. The market increasingly views geopolitical events as temporary shocks rather than structural threats. This is confirmed by the volatility trend. The VIX index previously showed a sharp rise, but has stabilized in recent weeks, indicating a decline in panic.
Investment strategists estimate that the market has already passed the phase of maximum uncertainty. This means that most negative scenarios were already priced in. Current reactions are becoming more rational and based on probabilities rather than emotions. Investors are adapting to a new reality where geopolitical tensions are perceived as a constant but manageable factor.
Nevertheless, the fundamental implications remain significant. Rising oil prices are increasing inflationary pressures and reducing the likelihood of imminent monetary easing. US 10-year bond yields have risen significantly since the start of the conflict, reflecting a revision in interest rate expectations. At the same time, the dollar index has strengthened, putting pressure on commodity and emerging markets.
Gold's performance provided an interesting signal. Despite rising geopolitical risks, the price of gold declined. This contradicts the classic "safe haven" model, but can be explained by the strengthening dollar and the actions of emerging market central banks, which may sell gold to support their currencies. This imbalance indicates that the market is in a phase of revaluation of traditional safe haven assets.
The key question is the time horizon of the current crisis. Political constraints related to the need for military action to be approved by the US Congress create a factor of uncertainty. If the conflict protracts, the market could face a new wave of volatility. However, for now, investors are betting on de-escalation, limiting the scope of the sell-off.
Investment strategists estimate that the market has already passed the phase of maximum uncertainty. This means that most negative scenarios were already priced in. Current reactions are becoming more rational and based on probabilities rather than emotions. Investors are adapting to a new reality where geopolitical tensions are perceived as a constant but manageable factor.
Nevertheless, the fundamental implications remain significant. Rising oil prices are increasing inflationary pressures and reducing the likelihood of imminent monetary easing. US 10-year bond yields have risen significantly since the start of the conflict, reflecting a revision in interest rate expectations. At the same time, the dollar index has strengthened, putting pressure on commodity and emerging markets.
Gold's performance provided an interesting signal. Despite rising geopolitical risks, the price of gold declined. This contradicts the classic "safe haven" model, but can be explained by the strengthening dollar and the actions of emerging market central banks, which may sell gold to support their currencies. This imbalance indicates that the market is in a phase of revaluation of traditional safe haven assets.
The key question is the time horizon of the current crisis. Political constraints related to the need for military action to be approved by the US Congress create a factor of uncertainty. If the conflict protracts, the market could face a new wave of volatility. However, for now, investors are betting on de-escalation, limiting the scope of the sell-off.
From an intermarket analysis perspective, the current situation demonstrates a classic chain: rising oil prices → rising inflation expectations → rising bond yields → strengthening dollar → pressure on stocks. However, this chain is not fully realized, as the final element—a large-scale stock market decline—is missing. This is the key sign that the market has partially adjusted.
Analysts' forecasts point to a possible normalization of oil prices in the medium term. As tensions ease, the risk premium is expected to gradually disappear, potentially returning prices to levels around $80 per barrel. In this case, pressure on inflation will ease, paving the way for a recovery in stock markets.
Thus, the current market phase is characterized by a balance between risk and the expectation of risk reduction. Investors remain cautious, but no longer react to news with the same intensity. This indicates a transition from the emotional stage to the stage of analysis and adaptation.
Analysts' forecasts point to a possible normalization of oil prices in the medium term. As tensions ease, the risk premium is expected to gradually disappear, potentially returning prices to levels around $80 per barrel. In this case, pressure on inflation will ease, paving the way for a recovery in stock markets.
Thus, the current market phase is characterized by a balance between risk and the expectation of risk reduction. Investors remain cautious, but no longer react to news with the same intensity. This indicates a transition from the emotional stage to the stage of analysis and adaptation.
The market has likely already passed the peak of fear associated with geopolitical escalation. Despite the sharp rise in oil prices and persistent risks, investor reactions are becoming more measured and rational. This doesn't mean the threats have disappeared, but it does indicate that a significant portion of negative scenarios have already been priced in. In the short term, the key factor will remain the dynamics of the conflict and the ability of markets to adapt to new conditions.
Written by Ethan Blake
Independent researcher, fintech consultant, and market analyst.
April 13, 2026
Join us. Our Telegram: @forexturnkey
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Independent researcher, fintech consultant, and market analyst.
April 13, 2026
Join us. Our Telegram: @forexturnkey
All to the point, no ads. A channel that doesn't tire you out, but pumps you up.
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