Markets Still Too Complacent Amid Iran War Investorideas
Global markets appear complacent, and investors should be being more proactive to safeguard and grow wealth, warns the CEO of one of the world's largest independent financial advisory organizations amid the escalating Iran conflict.
The warning from deVere Group's Nigel Green comes as the intensifying conflict with Iran, the US and Israel, among other nations, pushes oil prices sharply higher, triggers heavy selling across Asian equities and unsettles global markets over the past 24 hours.
US and Israeli strikes on Iran have triggered retaliatory attacks across the Gulf, threatening shipping routes near the Strait of Hormuz - the narrow corridor responsible for transporting roughly 20% of the world's oil supply.
Oil markets have already reacted sharply, with Brent crude rising around 1.4% on Wednesday to roughly $82.5 a barrel after surging in the previous session.
Prices have climbed more than 12% in just a few days as traders assess the risk of a prolonged disruption to Middle East supply.
Stock markets are beginning to respond, although Nigel Green says the reaction still appears“restrained” given the scale of the geopolitical shock.
Asian equities suffered some of the sharpest moves on Wednesday.
South Korea's KOSPI index plunged more than 10% in a single session, wiping out roughly $430 billion in market value and marking its steepest fall since the global financial crisis.
Wall Street has also felt the pressure. The S&P 500 fell around 0.9% in the latest trading session and briefly touched its lowest level in more than three months before recovering part of the losses by the close.
Despite the volatility, Nigel Green warns investors are still underestimating the potential economic consequences of the conflict involving Iran.
He warns that the inflation outlook could shift quickly if oil continues rising.
Financial markets had been positioned for easing inflation and gradually lower borrowing costs this year, he notes, but the war involving Iran introduces a significant new risk to that outlook.
He believes recent market behaviour reflects a pattern that has developed over the past decade.
Investors should be reviewing portfolio positioning now rather than waiting for volatility to intensify, he adds.
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