Geopolitical Shock Hits Markets
Selling followed reports linked to Iran and tanker damage. Iran state media said a missile hit an oil tanker, and the British Navy reported a large explosion at a tanker anchored in Iraqi waters. WTI crude rose 6% to above $79 a barrel, the highest since June 2025. Brent gained 3% to over $84, while about 20% of global oil consumption is exported through the Strait of Hormuz. Rate expectations shifted as oil rose. CME FedWatch showed a 96% probability of rates staying at 3.50–3.75% at the 18 March meeting, with pricing now leaning to one cut this year. Broadcom rose about 6% after quarterly EPS of $2.05 versus $2.03 expected and revenue of $19.31bn versus $19.18bn, up 29% year on year. AI revenue was $8.4bn, up 106%, and it guided about $22bn next quarter plus a $10bn buyback.Key Cross Asset Signals
Gold traded near $5,175 an ounce, up about 1% on the day and about 20% year to date; silver was about $84.50, up over 1%. Berkshire resumed buybacks, and its CEO bought $15m of stock; Bitcoin traded above $71K after rising about 5% on Wednesday. Initial jobless claims were 213K versus 215K expected, and continuing claims were 1.868m versus 1.850m expected. Forecasts for February payrolls are about 60K, with unemployment seen at 4.3%. The sharp market downturn signals a definitive shift to a risk-off posture, driven by geopolitical conflict. With volatility measures like the VIX likely spiking above 25, we should consider buying put options on broad indices like the SPY and DIA to hedge existing long positions. This mirrors past shocks, like the one we saw in early 2022 when the conflict in Ukraine began, where index protection proved invaluable. The surge in WTI crude creates a clear bullish case for the energy sector, which is one of the few areas showing strength. We should look to buy call options on energy ETFs like the XLE or on major oil producers to capitalize on rising prices. Looking back at the 2022 energy crisis, we saw this sector deliver massive outperformance, and the current supply threat through the Strait of Hormuz is arguably more severe. With the market now pricing in just one Fed rate cut this year, we must prepare for a “higher for longer” interest rate scenario. This suggests taking a bearish view on rate-sensitive sectors like regional banks and real estate investment trusts, possibly through put options on ETFs like KRE and VNQ. This strategy worked well during the aggressive Fed hiking cycle we experienced back in 2023. Broadcom’s stellar earnings prove the AI theme can power through wider market turmoil, creating a clear performance divide. We should maintain long positions in key semiconductor and AI names, using call options to express this conviction. This playbook is similar to the one from 2023, where AI-related stocks rallied significantly even as the broader market struggled with recession fears. The flight to safety is evident as gold soars past $5,000 an ounce, making it a critical portfolio component right now. We can gain exposure by purchasing call options on gold ETFs like GLD or on leveraged gold mining stocks. This move is supported by consistent central bank buying that we witnessed throughout 2024 and 2025, which provides a strong floor for the price. The upcoming Nonfarm Payrolls report is now a major catalyst for the market. A much weaker-than-expected number could quickly revive rate cut hopes and trigger a market bounce, making short-dated call options on the S&P 500 an interesting tactical play. Conversely, a strong report would solidify fears of persistent inflation and likely lead to another leg down. Create your live VT Markets account and start trading now.
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