By Michael Msika, Bloomberg Markets Live reporter and strategist
An intensified Middle East conflict is about to put equity investors’ resilience to the test as markets had only partially priced the risk of a US intervention in Iran.
The initial reaction doesn’t seem too dramatic this morning with stock futures inching lower, while traders await Iran’s response. All eyes are on the Straight of Hormuz and oil prices. From an equity perspective, hedging demand had been on the rise as investors were planning for all scenarios, including the possibility of a US strike. Put trading soared last week, heavily exceeding demand for calls in Europe.
