Yesterday’s modest rally in stocks in response to a new war in the Middle East that broke out over the weekend — for now — appears to have been a sham.
At mid-morning in the US, the Nasdaq was at its lowest point of the session, down 2.5%. The S&P 500 is down 2.3%. European markets are being hit even harder, led by a 5.2% fall in Italy’s IBEX 35 and a 4.1% drop in Germany’s DAX.
After reaching all-time highs in the weeks leading up to the war, precious metals are also collapsing. Gold is down 4.3%, silver is down 7.5% and platinum is down 11.3%. WTI crude oil continues to climb, up another 8% to $77 per barrel.
After declining relentlessly over the past five months or so, crypto markets are, however, showing a tiny bit of relative strength. Trading at $68,000, bitcoin is down 1% over the past 24 hours, but up more than 2% from its worst levels of the day.
Ether (ETH), Solana (SOL), and XRP (XRP) are also down over the past day, but much higher than the session’s worst levels.
There is no rebound yet in crypto-related stocks, which remain under heavy selling pressure on Tuesday.
Shares of trading platform Robinhood (HOOD) fell 7%, while Coinbase (COIN) fell 5%. The Strategy (MSTR) and Bullish Crypto Platform (BLSH) each fell 4%. Stablecoin issuer Circle (CRCL) held up better but still slipped about 1%.
“Historically, bitcoin, as the only liquid asset that also trades on weekends, has absorbed shocks during periods of forced de-risking,” said James Butterfill, head of research at CoinShares. “This time the price action was constructive, bitcoin gained despite increasing instability… This divergence is significant. The lack of significant selloffs despite rising yields and geopolitical tensions suggests positioning is adjusted from previous episodes.”
