Symbolic mock-ups of missiles are displayed on a street in Tehran, Iran. Photo: Reuters
Irish shares that had plunged on Monday morning, in tandem with markets across Europe, on fears the Gulf oil crisis is set to intensify. But the shares rebounded with extraordinary pace – the Iseq was up by 1.22pc at midday having been down 2.41pc at 10am.
The swing relfect moves across European markets after Donald Trump declared in a Truth Social post that the White House had had “very good and productive” conversations with Iran.
He said he’d delayed possible strikes on Iranian energy sites and power plants by five days, having initially set a 48 hour deadline for Iran to reopen the Strait of Hormuz to shipping.
That initial deadline, and evidence Iran was ignoring it, had sent markets into their early Monday tailspin.
That original deadline was seen in the markets has aggravating the already fraught situation and intensifying the hit to global energy supplies. It had sent oil prices higher – which fell back on the latest news on talks.
Vincent Juvyns, chief investment strategist at ING in Brussels said the market was beginning to factor in a recession risk, before the latest Trump move to de-escalate.
“Markets are switching to full stagflation mode now. I hope we won’t be in 2022 again in terms of markets performance, which was an ‘annus horribilis’ for diversified portfolios. A recession obviously can’t be ruled out if the crisis continues,” he said.
“We’re revisiting the stagflation playbook and looking for hedges such as renewable energy stocks and listed infrastructure. In terms of stocks, it’s important to target companies with a high level of pricing power and elastic demand. We simply can’t dismiss the warnings of the IEA about the extent of the upcoming oil and gas shock. We’re heading well under the levels we started the year on.”
That hunt for investments that are better placed to ride out an energy crisis is unlikely to end, even as immediate concerns ease.
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