LIVE MARKETS-Lessons from the past

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LESSONS FROM THE PAST

The Iran war had barely begun before market-related parallels to Russia's invasion of Ukraine were being drawn, but 2022 might not be the only year worth looking back at.

In fact, 1979, 2007/2008, 2020, 2022 and 2025 all "hold important lessons for the current imbroglio," according to a BofA Global Research report.

1979 represents “an oil supply shock that leads to both higher inflation and a demand shock,” followed by 2007/2008 as a “credit-induced slowdown exacerbated by an energy-driven inflation shock.”

The next few lessons come in quicker succession: 2020 brought “a pandemic-related supply shock that never turns inflationary, as the lockdown-fuelled decline in demand is even stronger,” followed by a “supply shock without demand destruction” in 2022 and finally 2025’s “growth and inflation worries that did not amount to much.”

According to the report, markets seem to be pricing in a mix of past experiences for the current situation.

“We think markets today are pricing a mix of '22 & '25 - very little demand destruction but the potential for higher inflation,” it said.

But, it noted “factors ensuring robust demand in '22 are not present today, while the risk of demand destruction is higher than in '25.”

(Sophie Kiderlin)

EARLIER LIVE MARKETS POSTS:

STOXX SET FOR WEEKLY GAIN, BUT IT DOESN'T FEEL LIKE IT CLICK HERE

EUROPE BEFORE THE BELL: NOT MUCH OF A RALLY CLICK HERE

MORNING BID: FOR HUNGRY MARKETS, IT WAS A KIDS' MENU TACO CLICK HERE