(Investorideas.com Newswire) issues market commentary on behalf of Deavere Group, a popular platform for great investment ideas including AI and tech stocks.
The CEO of one of the world’s largest independent financial advisory organizations has confirmed there will be clear winners and losers in global stock markets if the US and Iran reach a peace deal this weekend.
The comments from Deavere Group’s Nigel Green come as a 10-day ceasefire between Israel and Lebanon comes into effect, oil prices have retreated from recent highs, and global equities are heading into the week on strength on hopes of an uptick in diplomacy between Washington and Tehran.
He says: “Markets are already looking ahead to the outcome. Investors are preparing for a scenario in which tensions are reduced, energy flows are stable and global growth expectations are improving.
“If a deal materializes this weekend, change across all sectors will be swift and decisive.”
Global equities have shown resilience throughout the conflict. The S&P 500 continues its record close, supported by strong earnings and confidence that the disruption will be overcome.
The FTSE 100 is a long way from its own peak, while Asian markets are on course for a second week of gains despite a soft end to the week.
At the same time, oil has fallen below $100 a barrel following a ceasefire between Israel and Lebanon, with Brent trading around a high of $90 after rising above $100 at the beginning of the week.
Despite recent declines, prices remain sharply higher than levels around $60 seen at the beginning of the year, reflecting months of supply disruptions linked to instability in the Gulf and bottlenecks around the Strait of Hormuz.
Nigel Green says the next step depends on whether the diplomatic momentum translates into a formal agreement.
He says: “Energy markets would be the first and most obvious casualty of the peace deal. Oil prices are carrying a significant geopolitical premium. Take that away, and prices will collapse. This immediately reshapes the outlook for energy producers, especially those that have benefited from limited supply and elevated margins.”
He adds: “Major oil companies and energy exporters have outperformed during the conflict. The continued decline in crude oil prices will weigh on revenue and earnings expectations across the sector. Investors need to recognize how quickly sentiment here could reverse.”
He argues that attention should shift to sectors that benefit from lower input costs and improved economic visibility.
He adds: “Industry, transportation and consumer-facing businesses will benefit. Lower energy costs directly contribute to margins and spending power.
“Airlines, logistics firms and manufacturers will get immediate relief. Easing inflation pressures also strengthen consumer discretion.”
New momentum may also be seen in the financial situation.
He says: “Banks and broader financial stocks benefit from a more stable macro backdrop. Lower geopolitical tensions support lending activity, capital markets and investor confidence. Risk appetite increases, and this boosts the sector.”
Tech and growth stocks, already a major force in US markets, could extend their gains.
Deavere’s CEO explains: “A clear global outlook strengthens the case for tech. Capital continues to flow towards companies driving earnings growth and innovation.
“Expectations of low volatility and stable rates create a supportive environment for these names.”
Yet he warns that the market is underestimating the pace and scale of any adjustment.
He says: “The situation is built around a prolonged period of uncertainty. A definitive peace agreement forces rapid change. Capital increasingly moves out of defensive and commodity-linked assets and into sectors linked to expansion and consumption.”
Geography will also matter.
“Emerging markets, especially those sensitive to energy imports, will significantly benefit. Lower oil prices will improve the trade balance and reduce inflationary pressures. Equity markets in these regions may see strong inflows.”
Meanwhile, sectors and economies that have relied heavily on high commodity prices may face headwinds.
“Commodity-linked markets have lost a key support. Currency strength linked to higher energy prices may wane, and revised earnings expectations may soften equity performance.”
Nigel Green concludes that the broad conclusion is that investors are entering a critical moment.
“The US-Iran agreement will mark a clear inflection point. Winners and losers will become clear very quickly.”
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