LIVE MARKETS-The case for short‑lived turmoil
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THE CASE FOR SHORT-LIVED TURMOIL
European stocks have been wobbling for a second straight day and bond yields keep pushing higher as traders brace for stickier inflation and the possibility of more rate hikes, but there are still reasons to think this rough patch might fade quickly.
Deutsche Bank says “geopolitical risks have historically had limited impact on yields beyond their effect on oil prices.”
Brent rose more than $3 on Tuesday for a third day of gains as threats to shipping via the Strait of Hormuz heightened fears of supply disruptions. German bond yields, meanwhile, are up 14 basis points in just two days at nearly 2.8%.
However, “the market appears to be pricing in a relatively short-lived disruption to oil flows through the Strait of Hormuz, which the large surplus markets expect this year should be able to absorb,” ING analysts said in a research note.
Commodity analysts at Franklin Templeton suggested oil prices would likely rise between 10 and 20 dollars per barrel should the Strait of Hormuz remain closed for a month. Brent crude futures are at $82 from $71 before the attack.
Politics might also come into play, with U.S. mid‑term elections coming up in November 2026.
“U.S. pain tolerance is likely deemed limited: Trump cannot afford a sharp oil spike ahead of the midterms, supporting expectations of a short-lived conflict,” says Kevin Thozet, a member of the investment committee at Carmignac.
“A regime change could even become a medium-term positive backdrop for risk assets as the geopolitical premium in the region fades,” he adds.
(Stefano Rebaudo)
EARLIER ON LIVE MARKETS:
EUROPEAN STOCKS BATTERED AS SPECTRE OF INFLATION RETURNS CLICK HERE
EUROPE BEFORE THE BELL: FUTURES SLIDE FURTHER CLICK HERE
TRUMP'S 'WHATEVER IT TAKES' VOW DEEPENS STOCK SELLOFF, LIFTS OIL CLICK HERE
