Global stock markets have proved more resilient than many expected after a major disruption to oil flows linked to the Strait of Hormuz, Barclays said in a fresh strategy note. The bank's strategists, led by Emmanuel Cau, argue that a prevailing belief investors hold in potential U.S. policy intervention has helped limit the scale of equity losses so far.
"Investors still believe in the Trump put, hence global equities are not down as much as in past oil shocks," the team wrote, pointing to the role of perceived backstops in tempering market panic even as energy markets experienced intense volatility.
The physical disruption pushed crude prices sharply higher, with oil briefly moving toward $120 per barrel early in the week before pulling back after a public signal from U.S. President Donald Trump that he expected the conflict to be short-lived. Prices subsequently regained ground, trading back above the $100 per barrel level as the Strait of Hormuz closure continued to affect supply.
Despite the scale of the supply shock, Barclays notes that global equities are roughly 4% below their recent peaks. The strategists highlighted an International Energy Agency characterisation of the event as "the largest oil market disruption on record," yet observed that equity markets have not fallen in proportion to what might be anticipated under such circumstances.
"The IEA now characterises the disruption as the largest oil market disruption on record. Yet, Global equities are only about 4% off recent highs, suggesting that markets are not yet fully pricing a sustained oil shock," the strategists wrote.
Sentiment measures have not shown the degree of capitulation seen in deeper sell-offs. Barclays cited the American Association of Individual Investors bull-bear index as indicating that while sentiment has softened, it remains far from levels typically associated with wholesale investor panic. Conversations with clients, the bank said, reveal a broadly cautious - but not panicked - posture: many investors are adopting a wait-and-see stance and are adding selective downside hedges rather than exiting risk exposure entirely.
At the same time, Barclays observed a rotation in regional preference, with money appearing to flow back into U.S. equities at the expense of European and other global markets.
Underneath the headline stability, market internals point to rising stagflation concerns. Cyclical areas such as banks, materials and consumer stocks have lagged, while defensive or energy-linked sectors including energy, utilities and healthcare have held up comparatively well.
The strategists identified the chief danger as the length of the conflict and how oil prices evolve from here. "The longer the conflict drags on, the greater the upward pressure on crude and the more acute the risks to both inflation and growth," they warned.
Barclays also noted a pronounced negative correlation between equities and oil prices at present, and pointed out that historically a peak in oil prices has been a precondition for equities to stabilize during supply-driven shocks. Were oil to remain elevated or to move higher, the bank said, market expectations that policymakers will step in to blunt the economic consequences may be reassessed. In that scenario, "market confidence in a 'Trump put' may increasingly come under pressure," Cau and his team concluded.