Finance
Trading Day: Selling Snowballs, Turmoil Spreads
Published by Global Banking & Finance Review®
Posted on March 3, 2026
4 min readLast updated: April 2, 2026
Add as preferred source on GoogleGlobal Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on March 3, 2026
4 min readLast updated: April 2, 2026
Add as preferred source on GoogleA sharp global sell‑off widened as Middle East tensions triggered energy shockwaves, undermining traditional “60‑40” portfolios. Simultaneously, record redemptions in Blackstone’s private credit fund underscore growing liquidity and structural risks in the asset class.
ORLANDO, Florida, March 3 (Reuters) - The equity rout sparked by the deepening Middle East crisis spread on Tuesday as Wall Street finally buckled, with soaring energy prices and widening cracks in most other asset markets forcing investors and policymakers to rethink their outlook.
More on that below. In my column today I look at how the current turmoil has exposed the frailties of the traditional "60-40" investment portfolio. With stocks and bonds both selling off, where is the protection from diversifying?
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
Few corners of world markets are escaping the selloff now gathering force. Pockets that might have been insulated by solid underlying fundamentals or seen as reasonable diversification options are being hammered just as hard as anything else.
South Korean equities, gold and silver were among the biggest losers on Tuesday. It's no coincidence that they were among the biggest gainers recently - gold and silver at the end of last year, and the KOSPI up 50% in the first two months of this year. In the scramble for liquidity, assets that rose most on waves of frenzied speculation have most room to fall.
Two quarter-point rate cuts from the Fed this year are no longer fully priced into the 2026 U.S. rate futures strip. Right now, investors are viewing the negative energy supply shock and surging prices as an inflation threat rather than a growth risk, and are pricing the Fed accordingly.
With inflation already comfortably above the Fed's target, it could not be a more challenging environment for Kevin Warsh, President Donald Trump's Fed chair nominee, who is expected to succeed Jerome Powell in May. Might the Fed's first move under Warsh's leadership be a rate hike?
While events in the Middle East have a chokehold on global asset prices, the problems brewing under the hood of the private credit market haven't gone away. If anything, the surge in redemptions from Blackstone's flagship private credit fund shows they are intensifying.
Shares in Blackstone tumbled 5% on Tuesday, and shares in rivals KKR and Apollo also fell. They've all lost around 30% this year, and are down 45-50% from their all-time highs. The geopolitical turmoil has accelerated the scramble for cash and liquidity, snowballing the selling.
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
The deepening Middle East crisis led to a broad equity selloff, soaring energy prices, and heightened volatility across global asset classes.
Both stocks and bonds fell during this turmoil, reducing the traditional diversification benefits of 60-40 investment portfolios.
Oil rose 5% to its highest since July 2024, U.S. diesel hit record levels, and European LNG climbed 22%. Gold and other precious metals dropped notably.
With inflation concerns and a supply shock, markets no longer fully expect two Fed rate cuts this year, and speculation about a possible rate hike under new leadership has increased.
Redemptions surged in Blackstone's flagship private credit fund, and major firms like Blackstone, KKR, and Apollo saw significant share declines, reflecting intensified liquidity pressures.
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