The US attacks against nuclear facilities Iran monitors the headlines, but mass sales caused by geopolitical events are usually brief, according to Morgan Stanley’s strategists.
The market reaction has been moderate after the United States joined Israeli attacks during the weekend, With an increase in breint prices of up to 5.7% before cutting most profits on Monday.
Even so, Iran could respond to climbing interrupting traffic through the Ormuz Strait, an important route for the transport of oil and natural gas.
“History suggests that the majority of mass sales caused by geopolitical factors are short and modest,” wrote the strategists led by Michael Wilson in a note on Monday. “Oil prices will determine whether volatility persists.”
According to Morgan Stanley’s team, the previous geopolitical risk events caused some volatility in short -term actions, but one, three and twelve months after events, The S&P 500 rose 2%, 3% and 9% on average, respectively.
Investors in Variable Income had prepared for the possibility of an American intervention in Iran reducing their exposure, while the coverage demand increased in the days prior to air attacks. However, The actions had only lowered moderately and most of the recent volatility concentrated on the oil marketswith the Brent, uploading more than 20% this month to quote Around US $ 77 per barrel.
Meanwhile, a couple of favorable factors –the weakness of the dollar and the recovery of the growth of the profits– They are supporting the prices of US actions, according to Wilson.
Investors in variable income could get nervous if oil prices continue to rise. The effect on inflation and the economy would probably be significant and threatened the discharge path of the interest rate.
“If the Ormuz Strait is closed, we expect a great crisis of stagflation similar to 2022,” wrote the strategists of Panmure Liberum, Joachim Klement and Susana Cruz. “In this case, a correction from 10% to 20% seems likely, and we could observe a new bearish market if the trade war is intensified in early July.”
For Wilson and his team, the increase in the price of oil would have to be significant to create a bearish scenario. According to its analysis, oil would have to reach US $ 120 per barrel before supposing a threat to the economic cycle.
“Although we respect the risks, there is still a long way to go,” Wilson wrote.
