Global markets remain under pressure as the conflict in the Middle East continues to shape investor sentiment, with energy disruptions expected to persist even beyond any ceasefire, according to market analysts.
Speaking on market trends, Luca Paolini, chief strategist at Pictet Asset Management, said recent developments, including signs of dialogue between Iran and the United States, point towards a phase of de-escalation. He noted that while uncertainty remains, markets have reacted significantly, though not to the extent seen in previous crises. He added that the upside for equities remains limited despite a more optimistic outlook.
FCRF Launches Premier CISO Certification Amid Rising Demand for Cybersecurity Leadership
Oil Prices Expected to Stay Elevated
Paolini said oil prices may ease slightly but are unlikely to return to pre-war levels. He indicated that a range of USD 80 to USD 90 per barrel is more likely in the coming months, compared to earlier levels of USD 60 to USD 70.
He cautioned that elevated oil prices could weigh on the global economy, though the impact may be less severe than initially feared. Inflation risks, while present, are expected to remain contained if prices stabilise within the projected range.
China Seen as Relative Safe Haven
Paolini highlighted China as a relatively resilient market during periods of global stress. Despite being a major oil importer, China benefits from alternative energy sources such as coal and has made significant progress in electrification.
He noted that China’s distinct political and economic cycle often allows its markets, particularly bonds, to perform more steadily during global disruptions. While still a risky investment destination, China may appear comparatively safer when broader market risks increase.
Limited Upside for Equities Despite Ceasefire
The strategist said European equities could see some upside if the crisis eases further, while bonds may benefit from what he described as excessive market expectations of interest rate hikes.
He added that inflation may rise temporarily in the near term but is unlikely to prompt aggressive central bank responses, given weaker growth conditions. Risks ahead include potential political uncertainty in the United States, particularly around midterm elections, as well as concerns over slowing growth and possible downgrades in earnings expectations.
Paolini also pointed to artificial intelligence as both an opportunity and a risk, stating that while it may drive long-term productivity gains, short-term disruptions could keep markets under pressure.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
