The oil supply shock isn't simultaneous. It's a rolling disruption dictated by shipping times, hitting Asia first due to its reliance on Gulf crude and shorter voyages (10-20 days). Africa, Europe, and finally the U.S. (35-45 days) feel the impact sequentially, buffered differently by regional inventories.
Contrary to its safe-haven reputation, gold often gets swept up in an initial 'sell everything' trade during market stress. Gold performs best in moderate uncertainty, not extreme volatility like a Lehman-style event. Its bullish case only emerges later as the inflationary and growth impacts of a crisis become clear.
When inflation risk dominates markets, the traditional negative correlation between stocks and bonds breaks down. Bonds (duration) stop acting as a reliable hedge for equity drawdowns. In this environment, investors must seek explicit convexity hedges, like call options on oil or inflation breakevens, rather than relying on a balanced portfolio.
The key difference from the 2022 Russia-Ukraine shock is the macroeconomic starting point. Inflation was already at 6% then, versus a much lower level now. Interest rates were at rock-bottom levels, whereas now they are neutral to restrictive, giving central banks more of a buffer before needing to react aggressively.
The Federal Reserve's decision to keep rates unchanged provides a crucial, if unintentional, benefit to Emerging Markets. It limits pressure on EM central banks that would otherwise be forced to hike rates to defend weakening currencies against a backdrop of rising global interest rates, giving them more time to assess the shock.
The conflict has shifted the FX regime from pro-cyclical to risk-off, making the US dollar attractive as a high-yielder, defensive asset, and energy exporter. Beyond the dollar, the primary theme is pairing energy exporting currencies (like AUD, NOK, BRL) against energy importing currencies (like EUR), which are most vulnerable.