Despite rising tensions in the Middle East over the weekend, global markets opened this week without the sharp declines many had feared. Analysts sayinvestorshad largely anticipated the escalation, limiting panic reactions.
Matt Orton from Raymond James Investment, noted that while there was a negative reaction to the news, it was more benign than expected. “Investors had been prepared for some hostilities given recent US-Iran negotiations. Crude prices have eased from the worst jumps, and some Asian futures are recovering. The key question is what happens to the Strait of Hormuz, which will guide energy prices over the next weeks.”
Oncommodities, Orton explained that markets had already priced in much of the risk. “Gold is well bid and crude already includes a $10 per barrel premium. There isn’t much room to rise unless more disruptions occur, but US naval presence may limit duration,” he said.
The strategist also weighed in on the recent US clampdown on AI company Anthropic, which has raised questions about returns on AI investments. “Anthropic’s Claude code is powerful, but the market faces two narratives: money spent on AI may not yield ROI soon, yet AI is rapidly being implemented. Investors must weigh where the trade goes. For now, I focus on companies benefiting from AI integration and capex spend,” Orton said.
Looking at India, Orton highlighted the country’s attractiveness for global investors. “India has low correlation with the S&P 500. Even amid global risk-off scenarios, India performed well in 2022 and 2023. Being selective is key, but high-quality investments exist in India and globally, regardless of geopolitical tensions,” he explained.
As the week unfolds, market watchers will continue monitoring crude prices, the Strait of Hormuz, and investor sentiment. For now, careful preparation appears to have helped global markets weather the first shocks of geopolitical tension.
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