Deutsche Bank’s Henry Allen highlights the S&P 500's resilience in the face of recent oil shocks, noting that the index is only 5–6% below its record highs, a modest pullback compared to historical episodes such as 1979–80, 1990–91, and 2022, when market turbulence was more pronounced and recoveries followed swiftly [1]. Allen attributes this resilience to markets pricing in a short conflict, robust macroeconomic data, and the continued dovish stance of central banks [1]. He points to the US jobs report for March, which was the first to cover the period since strikes began on February 28, showing nonfarm payrolls up by +178k—the strongest increase in 15 months—and unemployment ticking down to 4.3% [1].
Allen draws parallels to past oil shocks, such as the second oil shock in 1979–80, when aggressive rate hikes by Paul Volcker led to market turbulence and a US recession in early 1980 [1]. He also references the bear market of 2022, which was followed by a strong recovery in 2023, with the S&P 500 reaching a new record by early 2024 [1]. Despite the current situation, risk assets like the S&P 500 and Europe’s STOXX 600 are holding up much better than during previous oil shocks, remaining only 5–6% beneath their record highs [1].
No specific forward-looking statements or analyst opinions regarding future market direction are provided beyond the historical context and current resilience [1].
CONCLUSION
The S&P 500 has demonstrated notable resilience amid the recent oil shock, supported by strong macroeconomic data and dovish central banks. Historical comparisons suggest that markets may recover swiftly from similar episodes, and risk assets remain close to their record highs. The overall market takeaway is cautiously optimistic, with limited stagflation fallout observed so far.