Sudden change in the US stock market! Massive sell-off, hundreds of billions of dollars fleeing!

Middle Eastern conflict sparks global market turmoil!

LSEG Lipper data shows that in the past week, investors sold off US stock funds significantly, with net outflows of $21.92 billion (about 150 billion RMB), the worst weekly net outflow from US stock funds in nearly eight weeks. Among these, US growth funds experienced $11.15 billion in outflows.

US stocks plunged overnight, with the Dow Jones Industrial Average dropping over 900 points intraday at one point, and the Nasdaq closing down 1.59%. Major tech stocks declined across the board, with Intel falling over 5%, Nvidia dropping 3%, Amazon, Tesla, and Meta down more than 2%, Apple down over 1%, and Microsoft and Google closing slightly lower.

The escalation of conflict between the US, Israel, and Iran triggered a surge in global oil and natural gas prices, intensifying investor concerns about inflation and possibly delaying the Federal Reserve’s rate cuts. This was a primary reason for the sell-off in US stock funds.

Massive Sell-Off

Fearing escalation of Middle East conflict and its potential impact on inflation and interest rate outlooks, investors reduced risk exposure. In the week ending March 4, investors withdrew a net $21.92 billion from US stock funds, the largest weekly outflow since January 7.

Reuters noted that as the Middle East conflict entered its seventh day, international oil prices approached their largest weekly gain since early 2022, heightening inflation concerns and possibly delaying the Fed’s rate cuts.

LSEG Lipper data shows that as of the week ending March 4, US growth funds experienced a $11.15 billion outflow, the largest weekly outflow since the week of December 17, 2025. However, investors still bought $146 million worth of value funds, marking the fourth consecutive week of net inflows.

Meanwhile, US sector funds saw $1.2 billion in inflows that week, with investors rushing to buy $1.65 billion in industrials, $671 million in utilities, and $582 million in metals and mining funds.

Safe-haven demand pushed US money market funds to a net inflow of $22.51 billion, reaching an eight-week high; US bond funds continued their ninth straight week of net inflows, totaling $7.29 billion; short-term investment-grade bond funds, municipal bond funds, and short-term government and treasury funds recorded large net purchases of $1.71 billion, $1.44 billion, and $929 million respectively.

Since the start of the week, the MSCI Global Index has fallen over 2.5%, heading toward its worst week since early April 2025. Global equity funds experienced approximately $1.44 billion in net outflows, mainly due to net outflows from US equity funds. European equity funds saw inflows slow from about $11.88 billion the previous week to $8.8 billion, while Asian funds attracted $7.43 billion in net inflows.

Among global sector funds, industrial and energy sectors recorded net inflows of $2.53 billion and $1.21 billion, respectively, while financial sector funds saw about $1.9 billion in net outflows.

Safe-haven demand drove global money market fund inflows to $20.22 billion, roughly matching the previous week’s inflow; global bond funds continued their ninth consecutive week of net buying, with investors pouring in $16.12 billion; short-term bond fund inflows surged from about $1.23 billion a week earlier to $3.62 billion; euro-denominated bond funds and corporate bond funds also recorded large net inflows of $2.31 billion and $2.09 billion, respectively.

Meanwhile, investors sold approximately $2.62 billion worth of gold and precious metals commodity funds, marking the second weekly net sell-off in eight weeks.

In emerging markets, stock fund inflows decreased to the lowest in eight weeks at $5.3 billion. Bond fund net purchases also declined from about $3.04 billion last week to $2.5 billion.

Global Oil Prices Surge

The Middle East conflict has caused intense turmoil in energy markets, nearly paralyzing shipping through the Strait of Hormuz, leading to a sharp rise in US crude oil futures. Traders are factoring in more hawkish expectations from major central banks, fearing that sustained energy price increases could boost inflation.

On Friday, WTI crude oil futures for the current month surged over 12%, closing at $91.27 per barrel; Brent crude futures rose over 9%, surpassing $93 per barrel. This week, WTI has gained 36%, and Brent nearly 28%.

Bloomberg reports that despite US President Trump hinting at “emergency measures” to stabilize oil prices and the US Treasury easing restrictions on India’s purchase of Russian oil, prices remain strong.

With hostilities showing no signs of easing, Goldman Sachs warned that if supply disruptions persist, oil prices could break $100. European diesel futures surged over 50% this week; central banks worldwide expressed concerns about a potential resurgence of inflation. Qatar’s energy minister even warned that oil prices could reach $150.

According to the Joint Maritime Information Center, commercial shipping through the Strait of Hormuz has become “almost completely halted” due to “security threats, insurance restrictions, operational uncertainties, and actual disruptions.”

Since the US-Israel military actions began on February 28, the conflict has affected over a dozen countries, severely impacting the oil market. As hostilities escalate, shipping through the Strait of Hormuz is nearly halted, disrupting global oil supplies, forcing producers to halt production, and affecting refineries and tankers. Qatar’s energy minister told media that if tankers cannot pass through the Strait, crude oil prices could spike to $150 within two or three weeks.

The prospect of a prolonged conflict has unsettled markets. IEA data shows about 20 million barrels of oil and products flow daily through the Strait of Hormuz, but recent ship tracking indicates a sharp decline in shipping volume.

Goldman Sachs’ co-head of global commodities research, Samantha Dart, said, “If the flow of oil through the Strait of Hormuz remains subdued over the next five weeks, Brent crude could break the $100 mark.”

(Article source: Securities Times)