ISRAEL IRAN Tensions: The Market Collapses! My Take, My Strategies

This Friday, June 13 marks a brutal turning point on global markets, after a night marked by Israeli strikes on Iranian soil. One of these strikes led to the death of the head of the Revolutionary Guards, causing an immediate and profound shockwave, both in financial markets and geopolitically.

The consequences were swift: oil prices jumped by more than 8%. This brutal surge, without exaggeration, is pouring oil on the fire in an already tense context.

Oil, Inflation, Central Banks: The Infernal Triangle

The spectacular surge in oil throws us back into a reality that markets seemed eager to forget in recent weeks: inflation is not dead. This rebound in commodities immediately questions monetary policy trajectories. If energy prices keep soaring, central banks will struggle to justify any easing.

For the Fed or the ECB, any prolonged rise in oil is a headache: its effects on consumer prices are direct, and expectations for rate cuts could be recalibrated or even delayed.

Market Reaction: Between Panic and Repositioning

We saw it as soon as markets opened this morning: markets are dropping. Volatility resurfaces, energy stocks are soaring, while indices are correcting. The S&P 500 is losing ground, the euro-dollar is moving wildly, and flows are leaving risk assets to seek refuge in safe havens such as gold or the dollar.

Now more than ever, panic must be avoided. Violent moves are often followed by opposite overreactions. The key is to have a clear strategy.

My Strategies in This Situation

1. Preserve capital. In times of geopolitical shock, risk management remains the top priority. I reduce my exposure to the most volatile assets and make sure to have a clear stop.

2. Adapt my plans. If oil breaks through significant resistance levels, we must consider a short-term bullish continuation. This is not a market I’ll short blindly.

3. Watch the key zones. For indices, I’m focused on major supports: 5994 on the SP500, 7760 on the CAC 40. If these hold, it may be just a scare. If they break, I’m ready to switch to a defensive mode.

4. Anticipate the domino effect. This kind of event can spark cross-asset liquidations. Correlations must be watched: oil, the dollar, emerging markets indices, agricultural commodities.

In conclusion

We’re in a phase where emotions are overtaking reason. My role, as an investor and educator, is to stay clear-headed, not to give in to the excesses of the moment, and to help those who want to understand. Tensions in the Middle East are nothing new, but their current intensity, linked to a fragile economic context, makes them dangerously explosive.

It’s up to us to be ready, informed... and agile.

See you soon,
Xavier