Historical data shows that in the coming days, this will be a key issue facing the S&P 500

Investing.com - The recent surge in oil prices triggered by the latest geopolitical tensions has reignited concerns about a prolonged risk-off environment. However, Deutsche Bank states that historical data suggests the stock market outlook will depend on whether the current shock escalates into a more severe situation.

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In a report analyzing past geopolitical upheavals, Deutsche Bank noted that “geopolitical events usually do not cause sustained market reactions,” citing earlier incidents in Venezuela and Greenland in 2026 as examples.

The bank pointed out that the current situation related to Iran is different because it “has macro channels that influence the market.”

Oil prices surged sharply, with Brent crude rising 7.3%, marking the largest single-day gain since March 2022.

This volatility has impacted global assets, especially European equities and bonds. However, Deutsche Bank emphasized that WTI crude remains “slightly below the 2024 average level ($75.8 per barrel),” and the S&P 500 “actually rose slightly yesterday,” just 1.4% below its all-time high.

The bank compared the current situation to major oil-driven sell-offs over the past few decades and stated that it has not yet reached any typical warning thresholds.

Historically, a sustained correction of over 15% in the S&P 500 requires “oil prices to surge by at least 50-100%,” enough to “push the already slowing economy into recession” or cause a “sharp hawkish shift by central banks.”

Deutsche Bank said, “The key question in the coming days will be whether any of these conditions are met.”

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