Recent developments in the Middle East have sparked concerns that the conflict could spiral into a wider regional crisis. While none of the involved parties have a direct military incentive to engage in full-scale warfare, the overall geopolitical tensions have clearly intensified. The risk of broader instability has significantly increased.
"}},{"componentType":"sectionTitle","title":"Oil, gold and the dollar ahead"},{"componentType":"paragraph","richBody":{"value":"This increase in geopolitical risk is particularly noticeable in oil prices. With nearly a third of crude oil supply coming from the Middle East, Brent oil rebounded nearly 4% to over $74 per barrel. Safe-haven assets such as gold (up 1%) and the dollar (up 1% against the euro) also benefit from the rise in risk aversion, which nevertheless remains moderate.
Indeed, it cannot be said that equity markets are particularly anxious: the MSCI index of the world's largest stocks is down 0.7% from its recent record.
No one is interested in a worst-case scenario, is the sentiment that continues to prevail in equity markets. And with central banks seemingly on course to win their battle against inflation and start a new cycle of interest rate cuts, equity markets continue to expect stronger earnings growth.
"}},{"componentType":"sectionTitle","title":"ING's investment strategy"},{"componentType":"paragraph","richBody":{"value":"As we know, armed conflicts, whether in the Middle East or Ukraine, can be a source of short-term volatility in the markets. As always, we are closely monitoring developments.
For now, our fund managers continue to favor equities, listed real estate, commodities and corporate bonds (especially investment grade) over cash.
More specifically, the strategy continues to favor themes such as artificial intelligence, and we continue to focus on the technology and communications services sectors, especially in the United States. Small and mid-cap stocks could also do well if the expected rise in earnings is confirmed.
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