Wall Street goes “haven first” as Middle East tensions rattle risk appetite

As tensions flare across the Middle East, investors are rotating into safe-haven assets like Treasuries, gold, and the CHF, ditching the reflex to buy the dip in equities, Bloomberg reports.

The playbook is explicit: “Haven first, ask questions later,” said Natixis’ John Briggs, pointing to a larger-than-expected escalation. Meanwhile, Barclays strategists cautioned against rushing to buy equities on weakness, arguing the risk-reward “doesn’t seem compelling” yet.

Emerging markets could fall out of favor, after briefly being a major wager for the world’s largest asset managers, who wished to rotate away from the USD and developed-market assets as policy uncertainty clouds the US outlook.

Some expect Treasuries to rally and yields to fall on safe-haven demand. However, a sustained oil spike could complicate the Fed’s path by stoking inflation and prompting a more cautious stance on rate cuts.

Oil is the swing factor: Traders are watching energy markets — especially the Strait of Hormuz — as strategists warn that if shipping is disrupted, “all [wagers] are off” for risk assets. Even the threat of prolonged turmoil is enough to push money managers toward safety.

Asia may feel the shock first: Saxo Bank’s Charu Chanana expects a risk-off open, with pressure on airlines, cyclicals, and trade-exposed sectors, while energy, mining, and defense could prove more resilient, according to an emailed note seen by EnterpriseAM. Higher crude prices, she notes, reflect the cost of moving barrels just as much as fuel prices themselves, with war-risk premia and ins. repricing keeping prices sticky.

Gold is another clean hedge in the crossfire: It can act as both geopolitical ins. and an inflation buffer — and, as Saxo notes, it can rise alongside a firm USD in classic risk-off fashion. Chanana also pointed to defense and other security-linked industries as essential classes, along with gold, to hedge against ever-increasing geopolitical risks.

MARKETS THIS MORNING-

Asia-Pacific markets are starting off the week in the red as investors ditch their stocks for safe-haven assets as the escalating regional war shows little signs of calming down. The Hang Seng is looking at the steepest losses in early trading this morning. Over on Wall Street, it’s more or less the same, with futures down. Gold futures, meanwhile, are up.

THE CLOSING BELL-

The EGX30 fell 2.5% at yesterday’s close on turnover of EGP 5.3 bn (16.3% below the 90-day average). Local investors were the sole net buyers. The index is up 14.7% YTD.

In the green: Heliopolis Housing (+1.5%).

In the red: E-finance (-5.4%), Kima (-5.1%), and Ibnsina Pharma (-4.9%).