No Place to Hide! Safe-haven assets collectively "strike" under Middle Eastern conflict, Wall Street works overnight to minimize losses

As the Middle East conflict continues to flare up, across the globe no asset—ranging from stocks and U.S. Treasuries to gold—has escaped a wave of aggressive selloffs. Facing this “nowhere to hide” plunge, fund managers and traders are enduring countless sleepless nights.

As the Middle East conflict spreads further, global markets have been hit by a brutal selloff storm, and many fund managers have already decisively cut their positions significantly.

From Shanghai to New York, traders, investors, wealth management managers, and bankers are all battling insomnia. Weekend overtime, lengthy client meetings, frequent reshuffling of holdings and switching stocks, and the anxious uncertainty right up to the last moment before trade execution have become business as usual for them.

Much of these challenges stem from a massive uncertainty: how long will the conflict between the United States and Israel with Iran last? And what far-reaching impact will it have on the already surge-beyond-$100-per-barrel oil price, inflation levels, the trajectory of interest rates, and the actions of central banks around the world?

Now entering its fifth week, the conflict has already sent traditional safe-haven assets like gold into a shaky slide, down about 16%, and it could mark the biggest monthly decline since 2008. This month, U.S. Treasury yields have also risen by 46 basis points, the largest increase since October 2024.

Although some market participants have tried to find a life raft in past experience—such as the Russia-Ukraine conflict that erupted in 2022 and the aftermath effects of the COVID-19 pandemic—most people have found that the old “case file” no longer applies today.

“There’s almost no safe-haven asset left now,” Rajeev De Mello, Chief Investment Officer of GAMA Asset Management, said. He has been working overtime on weekends and also has to chair team meetings that are far longer than usual. “U.S. Treasuries don’t work, and neither do typical safe-haven currencies like the yen and the Swiss franc. Gold and silver are equally unreliable.”

“Nowhere to hide”

The near month-long conflict triggered by the U.S.-Israel joint strike against Iran at the end of February caused Tehran to effectively block the Strait of Hormuz, a key “lifeline” for one-fifth of the world’s oil and liquefied natural gas transport.

This situation has revived investors’ fears of stagflation (high inflation alongside weak growth), leading them to essentially sell off almost all assets except the U.S. dollar.

“Since the outbreak of the conflict, we’ve been cutting stock positions, because there really is nowhere to hide,” Rajeev De Mello, based in Singapore, said.

Asian equities have been hit especially hard. South Korea’s stock market is down about 13% this month, and Japan’s Nikkei Index is also down about 9%. By comparison, U.S. stocks have held up somewhat better, with a decline of 6%.

The relatively more resilient performance of U.S. stocks has also drawn the attention of some investors.

Matthias Scheiber of Allspring Global Investments, based in London, cut his emerging markets positions and tactically increased exposure to the United States. But he warned that if other central banks around the world follow Australia in leading rate hikes, the pressure on the market could intensify further.

For those who “picked the wrong side” in this market turmoil, the days are especially brutal. A trader at an energy company said the outbreak of the conflict has kept him up all night because the company still holds some positions betting on lower oil prices.

“On the weekend when the conflict first broke out, I couldn’t sleep at all—night after night,” the trader said. He added that amid intense market volatility and a surge in internal meetings, the pressure is set to be heavy next week as well.

For Kenneth Goh, Director of Private Wealth Management at Wah Huat Securities, the conflict also means almost no sleep. However, it’s not because he bet wrong—rather, he is trying to manage his clients’ investment portfolios amid an unprecedented shock.

“It just won’t stop,” Goh said. “If I’m lucky, I can lie down right on time at midnight. If I’m not lucky, I can’t close my eyes until around 2 or 3 a.m., even 4 a.m., but then, who told me to choose this line of work?”

Turmoil spills into the corporate credit market

Uncertainty surrounding the ongoing Middle East conflict is also affecting new trades in the corporate credit market.

In New York, banks providing roughly $18 billion in debt financing to support the $55 billion acquisition of video game developer Electronic Arts (EA) are closely monitoring matters related to the final deadline this Monday set by U.S. President Donald Trump for striking the Iranian power grid.

Two informed bankers said that this deadline happens to collide with the later stage of the process this week when they were pitching the EA debt to investors, which could lead to borrowers facing tougher terms.

The two bankers said that bankers involved in the deal have been on high alert over the weekend, preparing for the possibility that Iran’s infrastructure could be targeted and for the potential pricing of the EA debt to rise as a result.

Bankers said that after Trump announced Monday that the strike would be delayed by five days, banks were able to lower borrowing costs for the roughly $6.6 billion cross-currency portion of the high-yield bond component of this debt.

On Thursday, Trump said he would pause threats of strikes on Iranian energy facilities for 10 days, until April 6. This endless market volatility means investors can’t afford to look away from their screens by even half an inch.

“You have to keep staring at the screens nonstop, monitor developments, and stay in the market at all times—this clearly takes a huge toll on your mental state,” said Mukesh Dave, Chief Investment Officer at Aravali Asset Management.

Dave, based in Singapore, said he also experienced similar high-pressure conditions during the 2008 period and the Asian financial crisis in the late 1990s. But he did not claim that the current situation can be directly compared to then—at least not yet.

“If it lasts another week or so, then we’ll see,” he said. “You can’t make any mistakes right now—the market has zero tolerance for errors.”