Investors have dramatically increased cash holdings to the highest level since the Covid pandemic, driven by fears of war fallout from Iran and private credit concerns. Bank of America's survey reveals cash levels jumped to 4.3% of assets under management in March, a significant rise from February's 3.4% and the largest monthly increase since March 2020. This marks a sharp reversal from January's record low of 3.2%, signaling a shift from bullish optimism to heightened caution.

The surge in cash comes as stocks and government bonds plummet following the US-Israeli bombardment of Iran on February 28th. Concerns over oil supply disruption and rising energy prices threaten global growth and inflation, deterring central banks from cutting rates. BlackRock analysts warn there are 'few places to hide' from this near-term supply shock.

The Stoxx Europe 600 index has fallen over 5% since the conflict began, reversing most of its 2024 gains, while the S&P 500 is down 2.6%.