The US-Israeli war breaks the "historical script". Deutsche Bank: US stocks deviate from past patterns, CTA funds may continue to reduce positions.

In the context of the escalating tensions between the US and Iran, global markets are gradually deviating from the "historical script." A month ago, when the war broke out, many institutional investors generally expected this geopolitical event to end quickly, betting that the stock market would rebound in the short term. This assessment was mainly based on historical experience. Statistics from the strategy team of Deutsche Bank show that in past geopolitical shocks, the S&P 500 index took an average of about 16 trading days to hit bottom, followed by a recovery within about 109 days. However, this average was heavily influenced by the extreme case of the Arab oil embargo in 1973, when the S&P 500 index took over five and a half years to fully recover lost ground. As of now, market trends have begun to deviate from this pattern. Last Friday marked the 20th trading day since the conflict erupted, and since the close on February 27, the S&P 500 index has fallen by about 7.4%, exceeding the average drop of 6.1% after historical geopolitical conflicts, indicating that this impact is more far-reaching. Although Monday morning saw a "buy the dip" rebound in the US market after President Trump signaled progress in negotiations, the uptrend did not sustain, showing that investor confidence remains fragile. From a fund perspective, institutional investors have significantly reduced risk exposure. Data from Deutsche Bank shows that active investors are currently underweight in stocks, but still have room to further reduce exposure. At the same time, systematic strategy funds including CTAs have reduced their stock allocations to below neutral levels for the first time since July, indicating that if the market does not rebound or volatility further increases, these funds may continue to sell. Market sentiment indicators also show an increase in tension. The S&P 500 Volatility Index VIX, also known as the "fear index," closed above 30 on Monday, a level that is usually seen as the market being in a highly alert state. In terms of index performance, on Monday, the S&P 500 index fell by 0.39%, the Nasdaq fell by 0.73%, and the Dow Jones rose slightly by 0.11%.