Spring Chill Bites! Global Stock Markets Experience Panic March - When Will the Rebound Come?

Capital markets are still experiencing intense volatility in the aftermath of Middle East conflicts. Global stock markets have declined for the third consecutive week, posting their worst performance in nearly a year, with European and American markets hitting new lows for the year. Inflation concerns triggered by soaring energy prices have also led to sell-offs in traditional safe-haven assets like U.S. Treasuries, pushing yields sharply higher. Even gold failed to provide shelter, with prices briefly falling below $4,500 on Friday’s close. Investors are waiting for signs of a bottom, wondering when the turbulence might end.

Three Weeks to Bottom?

History shows that markets often bottom about three weeks after a crisis erupts. Deutsche Bank strategist Jim Reid reviewed historical data in a report sent to First Financial, providing reasons to believe the sell-off triggered by this crisis may be nearing its end.

Reid presented the average performance of the S&P 500 after 30 major geopolitical events. “In terms of timing, the S&P 500’s average lowest point tends to occur about three weeks after the initial shock, and we are approaching that window,” he noted. When looking at the maximum drawdowns following these events, the median decline is around -6%, with an average of about -8%.

“From a longer-term perspective, the median recovery to pre-shock levels occurs around day 34 (less than seven weeks after the event), and the average return is close to full recovery by then,” Reid added.

Independent research firm Variant Perception shares a similar view, believing market sentiment is about to shift, with the next few days marking the peak of uncertainty in the U.S.-Iran conflict.

Recent market trading has become chaotic, signaling forced liquidations by some traders. “A very simple tactical liquidation rule is: when gold and stocks fall together sharply, it usually indicates margin calls or forced liquidations are happening,” the firm said. “We are in a phase of tactical liquidations. Investors are also panicking due to a sharp rise in short-term interest rates — the market has shifted from betting on multiple rate cuts this year to pricing in rate hikes. The recent elevated VIX index relative to VIX futures also reflects intense risk-off activity.”

All of this coincides with the escalation and spread of the U.S.-Iran conflict. This week, Middle Eastern oil and gas facilities were bombed, and Qatar significantly shut down natural gas production, signaling that the worst-case scenario is beginning to materialize. “Key energy infrastructure has been heavily damaged, and shipping volumes through the Strait of Hormuz have plummeted — events that just three weeks ago were unimaginable are now reality,” the firm said. These developments are likely to become key events marking the peak of market uncertainty in the coming days.

Could it fall another 5%?

For investors, future oil prices will significantly influence the stabilization of risk assets.

Michael Hartnett, chief strategist at Bank of America, said the market has not fully capitulated but is getting close. When 88% of global stock indices fall below their 50-day and 200-day moving averages simultaneously, it signals a prime opportunity to increase risk exposure.

The S&P 500 has already hit that level, but global markets need to decline another 3% to 5% to trigger this major buying opportunity.

Another signal for buying could be an increase in cash holdings in investment portfolios to 5%. A March survey of fund managers by Bank of America showed that this ratio had risen from a low of 3.2% in 2026 to 4.2%, and reaching 5% is not far off. Rising oil prices are causing ongoing losses in the market — affected by the U.S.-Iran conflict and attacks on Middle Eastern energy facilities, Brent crude futures have gained two-thirds year-to-date.

Hartnett believes that the upcoming November midterm elections may prompt President Trump to seek a quick de-escalation. This is also the main basis for Bank of America’s core investment advice: short the dollar when the dollar index is above 100; go long when the 30-year U.S. Treasury yield hits 5%; and go long if the S&P 500 drops below 6,600. However, if the conflict ends and Trump’s approval rating does not recover, U.S. stocks may struggle to reach new highs this summer.

The accelerated market correction this month actually began last October — when the Fed started cutting rates while stocks were at high levels. Hartnett said, “The end of a sharp correction often coincides with oversold conditions in leading sectors.” This phenomenon is occurring in Bitcoin, software sectors, and the “Seven Giants” of U.S. stocks. Previously overbought gold, precious metals, semiconductors, and emerging markets have also experienced painful capitulation selling. Hartnett’s team believes that once the market is convinced that oil prices will permanently fall below $100, investors will be much safer to re-enter risk assets.

Hartnett also outlined three core investment themes for the next five years: 1. The commodities bull market is expanding from gold to metals, energy, and strategic resources like chips, rare earths, minerals, and oil, with countries controlling these resources gaining a significant advantage. 2. Investors will favor international stocks and U.S. mid-cap stocks over highly leveraged large-cap U.S. stocks. 3. Consider allocating to contrarian consumer stocks — these may benefit from policies aimed at helping low-income voters.

(Source: First Financial)