Traders spend sleepless nights as Iran war roils global markets

For Wang Yapei, it’s all about sleeping well at night. The Shanghai-based fund manager has cut positions aggressively in the face of a steep selloff that has torn through global markets as the war in the Middle East rages on.

“I don’t like rollercoaster rides ... the opening was ugly, so ‌I cut portfolio positions to roughly 30%,” said Zijie Private Fund’s Wang, referring to Monday’s brutal rout in Chinese stocks. “Then I felt quite relieved.”

Despite a bit of a rebound later in the week, Wang ​is not looking to add positions due ⁠to wild and unpredictable moves in all asset classes globally - from stocks to oil to bonds and gold.

“Today, you seek bottom-fishing and the next day, you suffer from another ‌selloff,” said Wang. “When there’s uncertainty, you reduce your holdings so you can ‌sleep well at night.”

Wang is not alone - from Shanghai to New York, traders, investors, wealth managers and bankers are grappling with sleepless nights, working weekends, long client meetings, quick portfolio churns and last-minute nervousness in executing deals.

Those challenges stem primarily from uncertainty about how long the US-Israeli war with Iran will go on and what it would mean for oil prices - which are already above $100 a barrel - as well as inflation, interest rates, and central bank actions.

The war, now about to enter its ‌fifth week, has put gold, a traditional haven, on course for its biggest monthly decline since 2008 with a drop of about 16%. Treasury yields are up 46 basis points this month, the sharpest gain since October 2024.

While some ⁠market participants are leaning on past experiences, including Russia’s war with Ukraine that erupted in 2022 and the fallout from the COVID-19 pandemic, most are finding that old playbooks no longer work.

“There are very few risk-off assets,” said Rajeev De Mello, chief investment officer at GAMA Asset Management, who has been working through the weekends and running longer than usual team meetings.

“Treasuries are not working, typical risk-off currencies like the yen and the Swiss franc are not working. Gold and silver also not helping.”

The nearly month-long war triggered by joint US-Israeli strikes on Iran in late February has resulted in Tehran effectively shutting the Strait of Hormuz, a passageway for a fifth of the world’s oil and liquefied natural gas flows.

That has raised the spectre of stagflation - high inflation with weak growth - and resulted in investors selling almost everything except the US dollar.

“Since the war broke out, we’ve reduced equities because there’s no place to hide,” ​said Singapore-based De Mello.

Stocks in Asia have been particularly hard hit; South Korean equities are down about 13% this month while Japan’s Nikkei is about 9% lower. In contrast, US stocks have fared better ‌with a 6% decline.

That slightly better performance from US stocks has lured some investors.

Kenyon Tse, head of sales trading at UBS in Hong Kong, on Tuesday said every day since the beginning of March, his firm’s trading desk had seen net selling in TSMC, the biggest Asian firm by market capitalisation and many global investors’ biggest exposure to Taiwan.

London-based Matthias Scheiber at Allspring Global Investments trimmed his emerging market positions and tactically added to US exposure, but he warned that pressure could intensify ⁠if global central banks follow Australia’s lead in raising rates.

For those on the wrong side of the market tumult, things have been particularly daunting. A trader at an energy company said the outbreak of the war led to sleepless nights, as their firm had held some positions that bet on falling oil prices.

“I literally couldn’t sleep that weekend when it began,” the trader said, adding that the following week was highly stressful amid sharp volatility and a surge in internal meetings. The trader spoke on condition ​of anonymity as they are ‌not authorised to speak to the media.

For Kenneth Goh, director of private wealth management at UOB Kay Hian, the war has meant near-sleepless nights, not from wagers gone wrong, but from managing clients’ portfolios through an unprecedented shock.

“It’s been ‌non-stop,” Goh said. “If I’m lucky, I sleep at midnight. If not, I sleep at 2, 3 or 4 a.m. But that’s the life I chose.”

Ongoing uncertainty around the Middle East conflict has also impacted new deals in corporate credit markets.

In New York, banks backing roughly $18 billion in debt for the $55 billion takeover of video game developer Electronic Arts closely watched developments around U.S. President Donald Trump’s Monday deadline for strikes on Iran’s electricity grid.

That deadline coincided with the EA debt’s late-stage marketing ‌to investors early in the week ‌and could have led to less borrower-friendly terms, according to two bankers familiar with the matter.

Bankers on the deal over ⁠the weekend were preparing for the possibility of strikes on Iranian infrastructure and potentially higher pricing for the EA debt that would likely follow, the two bankers said.

Reuters