Has the market finally started to digest the complacency? JP Morgan and BCA sound the alarm, while Amundi says the expected duration of the Iran war has changed from "a few weeks" to "several months".

European asset management giant Amundi SA's Chief Investment Officer Vincent Mortier said that global markets have sharply deteriorated their expectations for the duration of the Iran conflict, with the conflict now expected to last for several months. Mortier stated that in the past 24 hours, market sentiment has shifted from expecting a resolution in "a few weeks" to "a few months". He mentioned that investing in the current situation of the war "is not easy". Due to the escalating attack threats in the Persian Gulf region threatening the long-term security of major energy facilities, oil and gas prices surged on Thursday. European natural gas futures prices skyrocketed by 35%, more than double the pre-war levels, while Brent crude oil prices briefly rose to $117 per barrel, with a cumulative increase of over 60% since the outbreak of the war, following an Iranian missile attack that damaged Qatar's largest liquefied natural gas export facility. Pimco's Global Economic Advisor Richard Clarida expressed a similar view at the same event, saying, "The longer this situation persists, the greater the negative impact on the US economy. If the energy shock persists for a long period, it is not yet reflected in market prices, but if it continues, it will indeed drag down economic growth." Vanessa Holtz, Head of U.S. Bank Securities Europe and CEO of the French region, also expressed a similar viewpoint. She stated at an event in Paris, "The market initially denied reality and the reaction was relatively muted." Last week, BCA Research's Macro and Geopolitical Strategist Marko Papic warned that the market is underestimating the severity and duration of the current tensions in Iran. The strategist stated in an interview, "The market reaction has been insufficient, as this conflict is likely to last a considerable amount of time." Papic believes that despite recent increases in spot oil prices, the oil market is displaying dangerously complacent sentiment; oil prices need to rise significantly to resolve this crisis. He predicts that oil prices must reach $120 to $130 per barrel, expressing concerns about the "general market complacency and the complacency in the oil market". In their latest report, JPMorgan strategists pointed out that investors who complacently believe that the Iran war will be resolved quickly are engaging in high-risk gambling, as surging oil prices often have very adverse effects on the stock market. Dubravko Lakos-Bujas's team stated that despite four out of the five oil crises since the 1970s leading to economic recessions, investors have not fully assessed the economic losses that soaring energy costs could bring. JP Morgan strategists in a report stated, "Although some high-risk factors and speculative bubbles in the market have receded, we still see complacency in the market." They added that when oil prices surge by around 30%, the correlation between the S&P 500 index and oil prices usually tends to become increasingly negative. They added that the market's focus is on the inflationary effects of rising oil prices, but the most severe consequence is the economic pressure caused by the long-term closure of the Strait of Hormuz. The core of this concern lies in the demand contraction triggered by the soaring oil prices. JP Morgan estimates that for every 10% increase in oil prices, US GDP growth may decrease by 15 to 20 basis points. If oil prices remain around $110 per barrel for the remaining year, earnings expectations for S&P 500 index component companies may decrease by 2 to 5 percentage points. They added that if oil prices continue to rise, profit pressure will be more evident. JP Morgan strategists have lowered their target for the S&P 500 index at the end of 2026 from 7500 points to 7200 points.