Has the global capital market entered a “risk-off mode”?

As the situation in the Strait of Hormuz escalates, what investors care about most is not a single strait, but whether global capital flows will change. After Iran announced the closure of the strait, the United States said shipping is still continuing, and the market faces significant uncertainty about future developments.
When geopolitical risks heat up, capital typically seeks safer assets. Gold, US Treasuries, and some energy assets often benefit first, while stock markets are more prone to volatility. In particular, industries such as aviation, logistics, and chemicals are highly sensitive to energy prices; if oil prices continue to rise, companies’ profitability could be affected.
On the other hand, energy and oil-and-gas companies may see a new window for earnings. Higher energy prices mean improved revenues for resource-related companies, and some countries may also accelerate the construction of strategic petroleum reserves, further stimulating energy investment.
However, the market also needs to guard against emotional trading. Historically, multiple crises in the Middle East have triggered short-term, sharp swings in asset prices, but as the situation eases, prices often return to fundamentals. Therefore, what truly determines market direction is not a day’s news, but whether the conflict continues to escalate.
In the coming days, diplomatic actions and military developments by the international community will become the most important barometer for global capital markets.
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