We think equities are at risk of a correction, not a bear market. The US is more resilient due to a robust economy, a stronger dollar, and strong corporate balance sheets less exposed to rising oil prices.

The longer the oil shock persists, the more nonlinear and impactful it becomes on inflation expectations, policy rates, and growth. This is feeding into near-term pricing of risk assets.

Institutions are well-hedged, providing stability. Much of the movement is rotation within markets, not aggregate pullback. Labor market weakness could further dampen consumer confidence and equity buying.