Oil prices have surged again, breaking the hundred mark. But this time, why isn't the market "turning pale at the mention of war"?

On Monday, the United States' decision to block the Strait of Hormuz, a key shipping route, triggered the usual market reactions: a surge in oil prices, an increase in bond yields, and a strengthening of the US dollar. However, this time, apart from the fluctuations in oil prices, the overall market response was notably restrained. The stock market's decline on Monday was relatively limited, indicating that investors had already priced in most geopolitical risks and were becoming less sensitive to news events. Billy Leung, an investment strategist at Global X ETFs, commented on Trump's statement, saying, "The market generally believes that this is more of a negotiating strategy. The market's uncertainty has reached its peak, and the reaction mechanism is no longer as extreme as before." Asian stock markets generally traded lower on Monday, but the fluctuations were noticeably mild, with major benchmark indices falling by around 1%. The decline in major US stock index futures was also less than 1%. The price of spot gold fell by about 0.5% to $4720.28 per ounce, while the US dollar index rose by 0.38%. The strengthening of the US dollar made gold more expensive for holders of other currencies, weakening the attractiveness of gold. Leung noted that recent market trends indicate that investors are gradually getting used to geopolitical shocks, and compared to previous weeks, market volatility has decreased. "Therefore, I believe that the market is now pricing in Trump's motives more reasonably and with a clearer understanding," he said. Similarly, Jun Bei Liu, Chief Investment Officer at Ten Cap, also stated that volatility indicators suggest that the worst of the panic may be over. "A few weeks ago, we saw the VIX index rise, which may have been the peak of panic and selling... From now on, the market will truly enter a self-adjustment phase." However, a key short-term risk is the political timetable related to US military actions. Leung mentioned the War Powers Resolution, which actually sets a limited time frame for the government to seek congressional approval for further military action. "In the coming weeks, we will see the Trump administration's sense of urgency continue to rise," he added, noting that the market may not have fully appreciated this constraining factor. Reports indicate that US lawmakers are once again seeking to pass a resolution to stop a war with Iran and force Trump to seek congressional approval before taking further military action. Oil prices are expected to fall, and the stock market may recover The US blockade of the Strait of Hormuz - which has significantly reduced traffic in the strait since the outbreak of conflict with Iran - has further strengthened expectations of tightening energy supply, driving up oil prices and intensifying global inflation concerns. Inflation concerns have cast a shadow over rate cut expectations, pushing bond yields higher, while the stronger US dollar has led to stock market declines. Since the outbreak of conflict, the yield on the 10-year US Treasury bond has risen by more than 333 basis points, while the US dollar index has risen by about 1.4%. Since the outbreak of conflict, US oil prices have soared by over 55%. As of writing, US crude oil futures for May delivery have risen by about 8% to $104.03 per barrel. Brent crude futures for June delivery have risen by about %, to $101.79 per barrel. Analysts expect that while volatility may continue in the short term, oil prices will eventually fall as geopolitical tensions stabilize. Michael Yoshikami of Destination Wealth Management said, "I am quite confident that oil prices will fall from here... We will see oil prices return to $80 per barrel." He expects the US and Iran to eventually reach a resolution through negotiations, which may quickly eliminate the current risk premium. Steve Brice of Standard Chartered Bank said that rising oil prices have delayed the possibility of monetary policy easing, putting upward pressure on bond yields and the US dollar. "However, we believe these are temporary phenomena, as we believe the US is seeking ways to de-escalate the situation." The trend of gold is more difficult to predict, as tensions in geopolitics intensify, but the price of gold has fallen. Brice attributed this to central banks in emerging markets selling gold to stabilize their currencies, but he expects that if tensions in the Middle East ease, demand for gold will rise. Currently, the market seems to be seeking a balance between heightened geopolitical risks and the expectation that conflicts will eventually ease, showing a calm response to Trump's statements. Brice said, "We believe the stock market's positioning structure supports a rebound. Therefore, as long as the situation does not substantially worsen, the stock market should continue to rebound in the short term." He added that while the macroeconomic backdrop remains relatively favorable, investor positions lean towards defensive assets, indicating that once conflicts begin to ease, there will be room for a rebound in the stock market. This creates a subtle environment for investors: geopolitical shocks remain important, but no longer trigger the level of panic selling seen at the beginning of the conflict. Yoshikami said, "This is no longer a binary outcome. In the coming period, the market will be in a gray area."