Hormuz Strait Emergency! U.S. Military Drops Heavy Ordnance! Retail Investors Suddenly Stop "Bottom Fishing" - What's Happening?

Iran Situation: New Developments!

On the early morning of the 18th, Iran’s Supreme National Security Council issued a statement confirming that Secretary Ali Rajianni was killed in the airstrike.

According to CCTV News, early morning on the 18th Tehran time, U.S. Central Command announced that a few hours earlier, U.S. forces successfully destroyed fortified missile launch sites along the coast near the Strait of Hormuz using multiple 5,000-pound deep-penetration munitions. The U.S. military stated that these sites’ anti-ship cruise missiles pose a threat to international shipping within the strait. As of now, Iran has not responded.

Additionally, on the 17th local time, Iran’s Islamic Parliament Speaker, Kalibaf, posted on social media that the Strait of Hormuz will not return to pre-war conditions. French President Macron also said on the 17th that France will participate in escort operations once the situation in the Strait of Hormuz is calmer.

U.S. President Trump on the 17th expressed dissatisfaction again with NATO allies for not participating in the U.S.-planned escort operation in the Strait of Hormuz, saying he was “disappointed” with NATO. Trump claimed that safe passage through the Strait of Hormuz “won’t be too long.” He also stated that the U.S. is not yet ready to end the conflict with Iran, but “we will leave soon.”

According to foreign media reports cited by CCTV News, the Pentagon is reinforcing forces in the Middle East, with the amphibious assault ship USS LPD-17 “Lafayette” heading toward the region.

On Tuesday, the three major U.S. stock indices rose sharply then fell back. By the close, the Dow rose slightly by 0.10%, after nearly a 1% gain during the day; the Nasdaq and S&P 500 gained 0.47% and 0.25%, respectively. Large tech stocks had mixed performances, with Google and Amazon up over 1%, Nvidia down 0.70%, and Facebook down 0.76%. Chip stocks diverged: Micron rose over 4%, Qualcomm up 1.70%, Intel fell nearly 4%.

Notably, the Iran situation previously dampened U.S. retail investor sentiment. A recent report from JPMorgan shows that as the Iran tensions escalated, retail investors in the U.S. ended their previous “buy on dips” enthusiasm, showing signs of “sustained” fatigue. During the week of March 5-11, retail weekly purchase volume plummeted nearly 30% week-over-week. Meanwhile, retail ETF weekly net inflows decreased by 22%, ending a three-month buying streak.

Latest News on Iran Situation

According to Xinhua News, Iran’s Supreme National Security Council issued a statement early morning on the 18th confirming that Secretary Ali Rajianni was killed in the airstrike.

Iran’s Tasnim News Agency cited the statement, reporting that Rajianni died early on the 17th. His son Morteza Rajianni, the deputy security affairs head of the Supreme National Security Council, and several accompanying personnel also perished.

The statement said Rajianni dedicated his life to Iran’s development and called for national unity in the face of external hostile forces. It emphasized that this event will further strengthen Iran’s resolve to continue the “resistance path.”

An IDF statement on the 17th indicated that Israeli forces carried out an airstrike near Tehran, Iran’s capital, killing Rajianni. The statement described Rajianni as one of the most senior members of Iran’s leadership for many years and a close associate of the late Supreme Leader Khamenei. After Khamenei’s death in an American and Israeli airstrike on February 28, Rajianni led operations against Israel and the U.S. in the region. The statement called Rajianni Iran’s “de facto leader.”

Additionally, on the 17th, Iran’s Islamic Parliament Speaker, Kalibaf, posted on social media that the Strait of Hormuz will not return to pre-war conditions. Earlier, on March 13, Iran’s new Supreme Leader, Mullah Khamenei, issued his first post-inauguration statement, reaffirming that Iran will continue to block the Strait of Hormuz. The Islamic Revolutionary Guard Corps (IRGC) repeatedly stated that the Strait is under strict control of the IRGC Navy, and “the U.S. and its allies have no right to passage.”

According to Xinhua, U.S. President Trump met with Irish Prime Minister Martin at the White House on the 17th and again expressed dissatisfaction with NATO allies for not participating in the planned escort operation in the Strait of Hormuz, calling his disappointment “disappointed.”

Trump told reporters, “NATO is making a very foolish mistake.” “I want to know if NATO will support us. So this is a good test because we don’t need them, but they should be there,” he said. “The U.S. must remember this because we find it very shocking.”

Trump claimed that the U.S. has invested “trillions of dollars” in NATO over the years, which is one of the reasons for the U.S. budget deficit. However, when asked if he would reconsider U.S. relations with NATO, he said, “No plans at the moment.”

Trump also stated that safe passage through the Strait of Hormuz “won’t be too long.” He reiterated that the U.S. is not yet ready to end the conflict with Iran, but “we will leave soon.”

On February 28, the U.S. and Israel launched a large-scale military operation against Iran, which responded with attacks on Israeli and U.S. military bases in the Middle East. The conflict has nearly halted shipping through the Strait of Hormuz.

Recently, Trump has been urging European countries and other allies to participate in escorting in the Strait of Hormuz, complaining that some allies are “not enthusiastic” about assisting the U.S. The 17th, Trump posted on social media that most NATO “allies” have informed the U.S. they are unwilling to participate in the U.S.-Israel military action against Iran, and that the U.S. is “no longer in need of, nor expecting” help from NATO countries.

EU High Representative for Foreign Affairs and Security Policy, Josep Borrell, on the 16th said, “This is not Europe’s war,” and “no one wants to get involved in this war,” adding that EU member states have no intention of expanding their current escort operations in the Red Sea and Gulf region to the Strait of Hormuz.

Purchase Volume Plummets 30%! U.S. Retail Investors Stop “Bottom Fishing”

The outbreak of the Iran conflict has broken a year-long “buy on dips” trend among U.S. retail investors. According to MarketWatch, last Wednesday, a report led by JPMorgan’s quantitative strategist Arun Jain stated: “For the first time this year, retail investors showed signs of sustained weakness, with weekly purchases down about 30% week-over-week. Previously, in February, they ignored seasonal patterns and recorded the third-largest monthly purchase volume on record.”

JPMorgan’s team noted that during the week of March 5-11, retail ETF inflows decreased by 22%, ending a roughly three-month buying streak. Total retail inflows fell to $6.7 billion, below the 12-month weekly average of $7.1 billion. ETFs remained popular, with inflows of $6.3 billion, while individual stock inflows were $400 million.

JPMorgan said retail investors are reducing their purchases of ETFs and stocks. The strategist noted that waning interest in individual stocks has further pressured the already moderate capital flows of the past two to three weeks. Last Monday, a dramatic sell-off on Wall Street marked the largest single-day net sell of individual stocks in a month. Although buying rebounded on Tuesday and Wednesday, it remained below the year-to-date average.

Despite overall reduced positions, retail investors’ stock picking remains relatively focused, favoring large tech stocks like Oracle, which have strong earnings reports, while reducing exposure to energy stocks. Last week, retail investors continued buying tech and consumer discretionary sectors, including Nvidia (+$399 million), Broadcom (+$178 million), Oracle (+$172 million), Microsoft (+$154 million), Tesla (+$85 million), and Palantir (+$85 million).

“This behavior is similar to what we saw at the start of the Russia-Ukraine conflict in 2022—initially buying energy stocks and ETFs, then turning negative briefly, and then resuming net buying as the conflict became clearer,” the report said. Two weekends ago, amid increasing instability in the Middle East, oil prices surged to nearly $120 per barrel.

JPMorgan’s charts show retail investors have recently been buying defensive stocks like aerospace and airlines, while net selling sectors like financials, healthcare, communications, and materials.

Additionally, USO, the U.S. Oil Fund tracking West Texas Intermediate crude oil prices, remains popular, with funds flowing out of the XLE, the Energy Select Sector SPDR ETF tracking major energy companies.

In some corners of the market, caution is abnormally high. Nomura Securities cross-asset strategist Charlie McElligott pointed out that options traders related to large tech stocks and Nasdaq 100 ETFs seem to be preparing for “disaster.” This has created a one-sided trading pattern and also presents potential opportunities for investors willing to bet.

Retail investors have become a noteworthy part of the investor landscape, dating back to the pandemic in 2020 when many were confined at home. Scott Rubner, head of stock and derivatives strategies at Castle Securities, recently called retail investors “the most powerful participants in the stock market,” citing record-breaking data from January. He said that although February’s flows were lower than January, it was still the fifth-largest net buying month on record and the strongest in five years.