The Israel-Hamas war makes investors nervous, but hasn’t sparked a headlong rush into many of the assets that traditionally see huge inflows during periods of geopolitical crisis. While dwarfed by the tragic human consequences of the conflict, the market reaction has left some analysts and investors struggling to explain why so far only a few traditional havens have benefited from a so-called flight to quality.
Stock-market volatility, meanwhile, has risen, but at 20.37, the Cboe Volatility Index
an options-based measure of expected volatility in the S&P 500 over the coming 30 days is just slightly above its long-term average just below 20. Perhaps, argued Marc Ostwald, chief economist and global strategist at ADM Investor Services International, a lack of more pronounced market volatility and subdued inflows into safe-haven assets go hand in hand, reflecting a sense of paralysis in the face of an overwhelming array of worries.
“The complexity of the large volume of event risks, be that geopolitical, macro- or microeconomic which markets are confronted with at the current juncture borders on the …