On 20 February 2020, the ASX 200 reached a record high. The first Covid cases had arrived in Australia three weeks earlier, and news footage from China, Iran and northern Italy looked like the opening act of a disaster film. But within a month, the index had fallen 35%.
Before the collapse, including a single-day plunge of 9.5%, the market’s reaction was relatively sanguine. It struggled to process an unfamiliar physical shock, drifting as it treated catastrophic signals as ambiguous noise. Then, suddenly, it couldn’t — and everything repriced at once.
Now take a look at today. The local bourse has fallen nearly 8% since 28 February, when the US and Israel began striking Iran. The International Energy Agency has described what followed as the largest supply disruption in the history of the global oil market.
That makes it larger than both the 1973 oil embargo and the Gulf War. A route that typically carries about a fifth of the world’s seaborne oil is now choked by the blockade of the Strait of Hormuz, amid a conflict with no clear off-ramp.
