LIVE MARKETS-Geopolitical sell offs usually create buying opportunities
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GEOPOLITICAL SELLOFFS USUALLY CREATE BUYING OPPORTUNITIES
Tensions are rising in the Middle East, with Trump warning Iran on Thursday that "really bad things" will happen if they don't make a deal over their nuclear programme in the next week or two.
Equity markets have largely shrugged off the latest comments, but there are risks that things could escalate, especially as the U.S. has been building its military presence nearby.
"The timeline of conflict and the range of outcomes remain wide," write Barclays equity strategists in a note.
With U.S. midterm elections coming up later this year, Barclays suspects that the Trump administration's willingness to tolerate a period of higher oil prices, and potentially casualties, to be limited. Therefore, they believe any conflict will be short-lived.
"We note that a geopolitics driven sell off in equities usually end up as good buying opportunities, with Trump still keen to give time for negotiations," Barclays adds.
"Of course, we acknowledge the tail-risk of further escalation in case of an aggressive Iranian retaliation. So for the time being, defensives may continue to catch a bid."
(Samuel Indyk)
EARLIER ON LIVE MARKETS:
STOXX 600 IN THE LAP OF LUXURY CLICK HERE
EUROPE BEFORE THE BELL: FUTURES HIGHER, MARKETS SET FOR POSITIVE WEEK CLICK HERE
TRUMP THREATENS IRAN WITH FORCE CLICK HERE
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