The Iran war has lasted for two months. Who are the biggest winners and losers among major asset classes?

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It has now been two months since the outbreak of the Iran war, and this conflict is reshaping the performance landscape of global major assets.

Deutsche Bank strategist Jim Reid conducted a systematic review of major financial assets, and the results show that some asset trends align closely with traditional oil shock scenarios, but there are also several surprising divergences.

Unsurprisingly, oil prices have become the biggest winner, with front-month Brent crude contracts rising by 49% over two months. Meanwhile, U.S. assets have significantly outperformed due to their structural advantage as a net energy exporter—the S&P 500 and Nasdaq indices have both hit record highs. Eurozone assets have broadly lagged due to greater energy exposure; coupled with weakening of the euro, the declines, when measured in U.S. dollars, are even more severe.

The performance of precious metals, however, represents the most notable anomaly in this shock—both gold and silver have fallen by more than 10% since the outbreak, clearly departing from traditional safe-haven logic. The bond market has also come under pressure, with 10-year government bond yields across major economies climbing sharply.

Oil Leads the Rally, Bond Markets Suffer a Blow

Oil prices lead the rally, but the market expects the shock to eventually fade. Front-month Brent crude contracts surged 49% over two months, the most outstanding performance among all assets. However, six-month Brent contracts rose only 25%, and the relatively flat forward curve indicates that investors still see this energy price spike as a temporary shock, rather than a structural change.

U.S. stocks hit record highs, South Korean stocks strengthen unexpectedly. As a net energy exporter with limited negative transmission from rising oil prices, plus a strong tech rebound in April, U.S. stocks have clearly outperformed globally. Since the conflict commenced, South Korea's KOSPI index has also risen, with total year-to-date returns exceeding 58% in local currency, making it another standout market in this round of geopolitical shocks.

Eurozone broadly lags behind, energy exposure proves fatal. In stark contrast to the U.S., eurozone assets have continued to lag, with higher dependence on energy imports as the core drag. When measured in U.S. dollars, the declines in eurozone assets are aggravated by the euro's depreciation; even as markets price in at least two ECB rate hikes this year, eurozone assets have yet to show any relative improvement.

Precious metals drop abnormally, rate hike expectations dampen safe-haven demand. Gold and silver have both dropped by at least 10% since the outbreak—a rarity during historical oil shock periods. Jim Reid gives two explanations: first, both were previously at historical highs and were vulnerable to corrections; second, the market's repricing of the rate hike path has compressed precious metals demand, as precious metal prices typically move inversely to real interest rates. All in all, though this divergence is abnormal, it is not hard to understand.

Global bond market suffers heavy losses, inflation and fiscal pressures push up yields. The bond market has also taken a heavy hit in this round of shocks. Over two months, UK 10-year gilt yields rose by 74 basis points, France by 47, the U.S. by 40, Germany by 39, and Japan by 35. According to Jim Reid, yield rises have two main drivers: first, inflation pressures triggered by soaring energy prices; and second, market concerns about further fiscal easing across nations. Notably, before the war, global bond yields were at relatively low levels due to AI-induced deflation expectations and worries over job replacement—those macro narratives now seem a world away.

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