US-Iran Conflict Continues to Escalate! Global Assets Face "Indiscriminate Selloff," Goldman Sachs Issues Stern Warning

Ask AI · What are the key points of disagreement in the US-Iran negotiations deadlock?

Author of this article | Gojira

Data support | Gogu Data (www.gogudata.com)

On March 23, the global financial markets experienced a rare “collective stampede.”

On Monday, Asian markets opened with a plunge, the Korea Composite Index hit a circuit breaker and closed down 6.49%, the Nikkei 225, Vietnam Index, major A-shares, Hong Kong Hang Seng and Hang Seng China Enterprises Index all fell over 3%.

All stock indices’ candlestick charts broke below support levels, with almost no buffer and no significant rebound—only a one-sided decline.

Precious metals, traditionally seen as the “ultimate safe haven,” also saw nearly collapse-level drops. Domestic gold futures plunged 8.62% to 940 yuan/gram, silver futures dropped 11.67% to 15,411 yuan/kg, platinum and palladium fell 11.38% and 12.42%, respectively.

Safe-haven assets and risk assets are both falling in tandem. The US 10-year Treasury yield rose to 4.42%, a six-month high; the US dollar index strengthened to 99.76, up 0.2%, further suppressing non-dollar assets.

This is a sell-off with almost no safe harbor.

The only asset class rising today is oil. Domestic crude oil futures surged 7.5% to 834.6 yuan per barrel, hitting a record high; WTI and Brent crude oil also rebounded to around $110 per barrel.

Such a rare global asset sell-off across the board—what exactly is the market afraid of?

01

Escalating US-Iran Conflict, 48-Hour Countdown

The trigger for today’s global market panic stems from the renewed escalation of the US-Iran conflict.

According to reports, on March 21 local time, the US began preliminary discussions on possible peace negotiations with Iran. Special envoys Jared Kushner and Steve Wittekov have participated in related talks, but there has been no direct contact between the sides—only third-party intermediaries like Egypt, Qatar, and the UK relaying messages.

However, the US’s conditions are directly targeting Iran’s core interests, leaving no room for compromise:

• Reopen the Strait of Hormuz to ensure global oil transportation;
• Destroy high-enriched uranium and abandon nuclear development;
• Halt missile development, uranium enrichment, and close three nuclear facilities within five years;
• Ban funding of anti-US armed groups in the region.

Iran’s counter-conditions are equally tough and harsh:

• Guarantee no further war, and that the US will cease military actions against Iran;
• Close all US military bases in the Middle East;
• Pay war reparations to Iran for aggression;
• End all hostilities on regional fronts;
• Establish new legal frameworks for the Strait of Hormuz;
• Trial and hand over media personnel involved in anti-Iran activities.

On the surface, both the US and Iran seem to signal willingness to negotiate, but the huge gap in their positions leaves little room for overlap.

More critically, Iran’s former parliamentary speaker Ali Larijani (a key figure capable of mediating factions) was recently assassinated, significantly reducing the likelihood of a peace deal in the short term.

Trump’s 48-hour final ultimatum further pushes the situation to the brink of crisis.

Based on Trump’s posting time (7:45 PM EST last Saturday), the 48-hour deadline expires around 7:45 PM EST on March 23, or 7:45 AM Beijing time on March 24. The ultimatum is blunt: If Iran does not open the Strait of Hormuz within the deadline, the US will strike and destroy all its power plants.

In response, Iran’s Revolutionary Guard issued a tough retort, threatening “all-out destruction”:

If Trump’s threat is carried out, Iran will immediately take four measures—completely close the Strait of Hormuz, attack all Israeli power plants and energy facilities, destroy all US-held companies in the Middle East, and strike power stations in Middle Eastern countries hosting US military bases.

Adding to the tension, on March 21, US forces attacked Iran’s Natanz uranium enrichment facility again. On the same day, Iran launched missiles at the towns of Dimona and Arad in Israel, injuring 175 people. Israel immediately announced the cancellation of all in-person classes nationwide for the following week, further escalating the situation.

Iran’s armed forces warned that if attacked again, they would severely strike the UAE’s Hail Ma’arib (near the Strait of Hormuz, a strategic location) and retaliate against the US and Israel equally.

This tense standoff has sharply heightened market fears of escalation into full-scale war.

Although there are reports that Trump’s team has begun discussing possible conditions for negotiations with Iran, the lack of direct contact and the huge gap in positions suggest that a peace agreement is unlikely in the short term.

Uncertainty has become the biggest “enemy” for the global markets and the direct driver of asset sell-offs.

Now, no one knows whether the Middle East will ignite a full-scale war in 48 hours; no one knows if the Strait of Hormuz will be completely closed.

02

Goldman Sachs Warns: The Second Shoe Is About to Drop

The uncertainty in US-Iran negotiations is just the “spark” for the global market plunge. What truly worries markets is the long-term impact of high oil prices on the global economy, which could drag down financial markets.

Currently, the Strait of Hormuz—this “energy lifeline”—is nearly paralyzed—actual flow has plummeted from the normal 20 million barrels/day to just 600,000 barrels/day, a 97% drop. The loss of Persian Gulf oil flow accounts for 17% of global supply, a scale 18 times higher than Russia’s peak oil disruption in 2022.

Goldman Sachs issued a stern warning in its recent flagship macro report, Top of Mind: While global assets have fully priced in an “inflation shock,” they have completely ignored the devastating impact of soaring energy costs on global growth. Once the market’s optimistic assumption that “the war will end soon” is proven wrong, “growth slowdown (recession)” will become the second shoe to fall, triggering a violent reversal in asset prices.

According to Goldman’s estimates: every $10 increase in oil prices reduces global GDP by more than 0.1%, and raises global inflation by 0.2 percentage points, with some Asian countries and Europe hit even harder.

Based on this, the three-week disruption of the Strait has already shaved about 0.3% off global GDP; a 60-day closure could cut global GDP by 0.9% and push up global prices by 1.7%.

Adding to this, the Global Financial Conditions Index (FCI) has tightened by 51 basis points since the conflict began, sharply increasing the risk of global economic slowdown.

More alarmingly, high oil prices are also intensifying inflationary pressures worldwide, forcing major central banks to adopt hawkish policies, further tightening monetary conditions—becoming the “last straw” crushing asset prices.

On March 18-19, major central banks held back from changing interest rates but signaled hawkish stances:

• The Fed raised its year-end PCE inflation forecast, expecting only one rate cut this year and one in 2027;
• The Bank of Japan warned that rising oil prices due to Middle East conflict would worsen inflation pressures;
• The European Central Bank and Bank of England also signaled that they might raise rates as early as April to counteract inflation driven by the Iran conflict.

Expectations of tighter monetary policy have pushed up real interest rates and the opportunity cost of holding non-yielding assets, which is a core reason for the continued decline in gold and other precious metals.

03

From “Trading Inflation” to “Trading Recession”

Previously, markets believed that the US-Iran conflict would only cause short-term oil price increases, with manageable inflation pressures, and that central banks wouldn’t over-tighten, allowing economic growth to remain resilient. Asset prices mainly focused on “inflation expectations,” and some cyclical assets remained relatively stable.

But as the blockade of the Strait of Hormuz persists and negotiations stall, markets are beginning to realize: high oil prices are not a short-term phenomenon but could last for months or longer. This long-term shock not only fuels inflation but also raises the risk of a global recession.

Thus, the trading logic has completely reversed—“recession expectations” are now central to market pricing, and valuation frameworks for all assets are being reshaped—both safe-haven and cyclical assets are being sold off en masse.

The first to suffer are non-yielding precious metals. Despite their traditional safe-haven status, in the context of rising interest rates, a strong dollar, inflation expectations, and recession fears, their appeal has greatly diminished. Gold prices have erased all gains made this year, and last week, gold plunged 10.44%, marking the largest weekly drop in nearly 42 years.

Similarly, industrial metals like copper, aluminum, tin, and zinc have experienced “bloodbaths.” As core raw materials for industrial production, a global recession would sharply reduce industrial demand, causing demand to collapse.

Emerging market equities are also under pressure. Recently, they faced heavy selling, with the MSCI Emerging Markets Index falling 3.8% intraday today, hitting a new low for the year. Major markets like Brazil, India, and South Africa declined over 4%, with funds fleeing into the US dollar and other safer assets.

Goldman strategists warn: So far, global assets have only priced in this conflict as an “inflation shock,” completely ignoring the risk of “growth slowdown.” Once this blind optimism is shattered—if energy prices prove to be persistent—the market will be forced to sharply downgrade expectations for global growth and corporate earnings.

Goldman warns: if oil prices break above $160 per barrel, it will directly trigger a global recession. Historical data from the 1973–1975 and 1990 oil crises show that high energy prices eventually crush demand, with energy remaining relatively resilient while metals and grains collapse first. If this conflict drives oil prices into that range, the divergence among commodities will be far more intense than now, and the asset sell-off will escalate further.

04

Summary

For global capital markets, the key to an early recovery lies in whether the Strait of Hormuz can fully reopen and whether international oil trade can return to pre-war levels.

This is a crucial chain reaction: only when the Strait’s traffic normalizes, the oil supply gap is filled, and oil prices gradually decline; then inflation pressures ease, and major central banks’ tightening expectations can relax marginally.

With easing monetary policy, market valuation logic can shift from “trading recession” back to rationality, gradually restoring valuations.

For ordinary investors, the most important thing now is to stay cautious, respect the market, and patiently wait for clarity in the situation. (End of article)