Recent developments in the Middle East are altering the fundamental logic of global markets. Observing the performance of major global asset classes reveals an extremely unusual combination of events occurring simultaneously. Crude oil and natural gas prices are soaring, while gold and silver are experiencing rare sharp declines. Industrial metals such as London copper, aluminum, and tin are also falling significantly, and global stock markets are under substantial pressure. Since March, ICE Brent crude oil has risen by 39.76%, while COMEX gold has fallen by 12.82%.
War has broken out, yet haven assets aren't rising? Why is gold plunging? Using past logic, this situation is entirely inexplicable. However, from a different perspective, it becomes clear that the market is no longer trading based on war itself. Instead, a more dangerous logic is at play: "recession trading." The core driver of this volatility is not the war itself, but the "shock" caused by the war. The logical chain is very clear: Escalation of Middle East conflict → Surge in oil and gas prices → Rising inflation expectations → Collapse of interest rate cut expectations → Resurgence of rising interest rates. Within just a few weeks, the market narrative has shifted dramatically: from discussing when the Federal Reserve would cut rates, to questioning whether it might hike rates again. Jeffrey Gundlach, known as the "new bond king," directly stated that the nearly 50 basis point rise in the US 2-year Treasury yield in under three weeks implies a "possibility of rate hikes" is already priced into the interest rate market. On the same day, Wall Street largely abandoned bets on rate cuts for 2026. This is precisely the root cause of gold's decline – when interest rates rise, the appeal of non-yielding gold naturally diminishes. If gold's drop reflects the "interest rate logic," then the plunge in industrial metals reflects a deeper fear: expectations of a global economic recession. On the LME market: Aluminum prices fell over 8% in a single day, marking the largest drop since 2018; Copper fell over 5%, and Tin plummeted 7%. This synchronized decline of both "precious metals and industrial metals" is relatively rare in history. Its cause is not a simple change in supply and demand, but rather the market beginning to price in a more dangerous path: rising oil prices not only push up inflation but also, by increasing economic costs, ultimately suppress demand and hinder growth. For this reason, the logic behind the stock market decline is gradually converging with that of commodities – oil is transitioning from an "inflation variable" to a "recession trigger." Out of the past five oil shocks, four ultimately led to global economic recessions. This time, the global market has already begun pricing this in early: International investment banks are lowering their target levels for the S&P 500 index; If oil prices remain around $110, corporate profits could decline by 2% to 5%; A 10% increase in oil prices might reduce US GDP growth by 15–20 basis points. Historically, after oil prices rise by approximately 30%, the relationship between stock markets and oil often turns negative – the higher the oil price, the greater the pressure on risk assets. This explains why – while crude oil is rising, almost all other assets are falling. In essence, this represents a classic return of "recession trading": on one side, energy-driven inflationary pressures, and on the other, growth concerns stemming from weakening demand. Meanwhile, the Federal Reserve finds it difficult to provide liquidity before inflation shows clear signs of abating, leading to overall pressure on asset prices.
Regarding the turmoil in the Middle East,知名投资人但斌 holds a relatively optimistic view. 但斌 believes that comparing two major black swan events – the 2025 trade war and the current 2026 US-Iran conflict – their impact on the Nasdaq index is vastly different, and the level of market panic is far from similar. 但斌 stated: "The 2025 trade war was a systemic blow to global supply chains and corporate profits. The reciprocal imposition of high tariffs between the US and China directly severely impacted the costs and growth expectations of tech giants. Coupled with pressures from high interest rates and high valuations, market concerns about a comprehensive recession led to widespread panic. The Nasdaq fell over 30% from its historical peak, entering a technical bear market, representing a deep, trend-driven adjustment based on fundamentals. The 2026 US-Iran war is more of a short-term sentiment shock caused by geopolitics. The conflict pushes up oil prices and triggers risk-off sentiment, but its impact on the profitability of technology companies is limited and has not shaken the AI industry cycle or the cash flow resilience of leading companies. The market views it as a localized, temporary event, resulting in only a moderate correction in the index without extreme panic. In short, the 2025 trade war shook the foundation of profits, whereas the current US-Iran conflict primarily affects risk appetite. Of course, if the conflict drags on unresolved in the future, it cannot be ruled out that it could trigger more severe market panic."
From the perspective of the current market trading narrative, the real divergence lies not in "up or down," but in a more core question: is this conflict merely a short-term disturbance or a long-term variable? If it is only a temporary shock, then as oil prices recede and inflation eases, interest rate pressures should gradually diminish, allowing the market to potentially return to a framework dominated by growth and liquidity. However, if the conflict becomes prolonged, or even affects key energy通道, then high oil prices could persist. The contradiction between inflation and growth would be continuously amplified, potentially pushing the market into an unfamiliar territory – one without easing, without high growth, but only with higher funding costs and more fragile demand. This is why it's said that the Middle East conflict affects not just oil prices; it is changing the entire market's "pricing coordinate system." As oil prices re-emerge as a core variable, as interest rates regain dominance over asset prices, and as geopolitics re-enters the main narrative, the investment logic familiar over the past few years is quietly becoming obsolete.
