{"id":536164,"date":"2026-03-14T15:53:09","date_gmt":"2026-03-14T15:53:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/536164\/"},"modified":"2026-03-14T15:53:09","modified_gmt":"2026-03-14T15:53:09","slug":"the-world-has-changed-a-lot-in-the-past-two-weeks-the-stock-market-has-not","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/536164\/","title":{"rendered":"The world has changed a lot in the past two weeks. The stock market has not"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Traders work on the floor of the New York Stock Exchange, March 12.TIMOTHY A. CLARY\/AFP\/Getty Images<\/p>\n

We\u2019re all over a barrel now.<\/p>\n

The mess in the Middle East has awoken powerful threats that can menace every corner of the world economy when the supply of oil is at stake.<\/p>\n

Little is spared from an oil-price shock, from the state of global growth, all the way down to the finances of Canadian households. Airfares are already on the rise. Gasoline prices nationally are up by about 25 per cent in the past two weeks. Food inflation won\u2019t be far behind. You could even end up paying more on your mortgage.<\/p>\n

The financial ripple effects are just beginning. Interest rates, currencies, commodities and stocks have all begun to put a price on the worst oil supply disruption on record.<\/p>\n

No real signs of distress, though, from a situation that would seem to warrant it. While the world has changed a lot in the last couple of weeks, the stock market hasn\u2019t. Since the conflict erupted, U.S. stocks are down by just 4 per cent. Canadian stocks have lost 5 per cent.<\/p>\n

No one should trust this calm. It is wildly out of proportion to the economic upheaval taking shape.<\/p>\n

\u201cIf you\u2019re running full risk right now, on any market, in any direction, you\u2019re certifiably insane,\u201d said Adam Butler, chief investment officer at ReSolve Asset Management in Toronto. <\/p>\n

\u201cIt\u2019s an unfathomably complex situation and there are so many different ways things can cascade out of control.\u201d<\/p>\n<\/p>\n

Who knew our collective financial well-being was so dependent on a sliver of sea in the Middle East? The Strait of Hormuz<\/a> is now a household name for its ability to wreak economic havoc when it is shut down.<\/p>\n

Not only is it a transitway for one-fifth of the world\u2019s oil, but also one-fifth of world\u2019s seaborne natural gas, and one-third of the world\u2019s fertilizer.<\/p>\n

An oil shock alone would be bad enough. Oil remains the lifeblood of global industry, and a major disruption to its supply is a fearsome thing as it is both recessionary and inflationary at the same time.<\/p>\n

Inflation risk means rising bond yields, from which mortgages are priced. The one million Canadians facing mortgage renewal this year can\u2019t be thrilled with that.<\/p>\n

Rising prices also take interest rate cuts off the table, which the weakening Canadian economy and deteriorating jobs market could probably use at this point. An ugly labour market report on Friday followed a surprise shrinking of Canadian GDP in the fourth quarter, and now the economists are beginning to whisper of \u201cstagflation\u201d \u2013 the dreaded combination of a stagnant economy and high inflation.<\/p>\n

Why investors should avoid looking for a market bottom in wartime<\/a><\/p>\n

There is more to worry about than energy. The Strait of Hormuz is also the chokepoint for the ingredient used to fertilize half the planet\u2019s crops. Higher food costs are quickly materializing at a time when plenty of Canadians are struggling to cope with grocery bills as it is.<\/p>\n

How to make sense of stock market stability as we flirt with an economic cataclysm? <\/p>\n

Market strategists have been quick to point out that rarely do such conflicts have any long-lasting impact on stock prices. In 20 major episodes since the Second World War compiled by analysts at RBC Wealth Management, the S&P 500 index fell by an average of just 6 per cent. <\/p>\n

The outliers in that list, however, involve major oil market disruptions, like the Arab oil embargo in 1973, and the Iraqi invasion of Kuwait in 1990.<\/p>\n

One factor likely keeping panic-selling at bay is the sense that U.S. President Donald Trump would not allow financial markets to fall apart on his watch. In the past, market freakouts have proven capable of making him back down. The Liberation Day tariff fiasco last April, for example.<\/p>\n

It\u2019s not foolproof, but the market seems to be a more effective guardrail for this administration than things like laws or common sense.<\/p>\n

The problem is, the Middle East conflict is no longer something that can be just switched off, thus swiftly restoring financial calm, like the bombing of Iran last year proved to be. <\/p>\n

So, what do you do as an investor? One dilemma with an oil shock is that there is almost nowhere to hide. It drags down both stocks and bonds, so diversified portfolios are vulnerable.<\/p>\n

Commodities can act as a shock absorber in such moments. Over the past two weeks, the S&P GSCI commodity index is up by 18 per cent.<\/p>\n

Defensive stocks can also help. These include sectors like consumer staples and utilities. Maybe sit on a bit more cash than you normally would. And if you want to get fancy, you can try managed futures \u2013 an alternative investment that can latch onto a market trend, whether prices are going up or going down. These can do well when stocks and bonds are both falling, Mr. Butler said.<\/p>\n

But there\u2019s no need to do anything drastic. You don\u2019t need to time the next market crisis. You only need to endure it. <\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Traders work on the floor of the New York Stock Exchange, March 12.TIMOTHY…\n","protected":false},"author":2,"featured_media":536165,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-536164","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/536164","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=536164"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/536164\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/536165"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=536164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=536164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=536164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}