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Yahoo
23-06-2025
- Business
- Yahoo
Investors set to flock to safety as world awaits Iran's response
'The level that stock markets are standing at, they're definitely going to face increased risk, there's no doubt about that' Traders are forecasting a drop in stocks, a jump in crude prices and possibly a strengthening of the dollar as investors head for safety in the wake of the US attack on Iran's three main nuclear sites. Concern that the war will intensify even further is likely to push equity prices lower, while bonds may get a boost, market watchers say. The moves will be bigger if Iran responds with steps such as blocking the Strait of Hormuz, a key passage for oil and gas shipments, or attacking US forces in the region, they say. 'The initial reaction will be a flight to safety and equities will probably be weaker,' said Neil Birrell, chief investment officer at Premier Miton Investors. 'The level that stock markets are standing at, they're definitely going to face increased risk, there's no doubt about that.' Market reaction has been muted since Israel's initial assault this month: Even after falling for the past two weeks, the S&P 500 is only about 3% below its all-time high from February. Investors expect the conflict to be be localized, with no wider impact on the global economy, said Evgenia Molotova, a senior investment manager at Pictet Asset Management. 'But it all depends on how the conflict develops and things seem to be changing by the hour,' she said. 'The only way they take it seriously is if the Strait of Hormuz gets blocked because that will affect oil access.' Iran has vowed to impose 'everlasting consequences' for the bombing and said it reserves all options to defend its sovereignty. Still, downside is likely to be limited because some market participants have been preparing for a worsening conflict. The MSCI All Country World Index has pulled back 1.5% since Israel attacked Iran on June 13. Fund managers have reduced their stock holdings, shares are no longer overbought and hedging demand has increased, meaning a deep selloff is less likely at these levels. The biggest market reaction since the start of the escalation has been in oil, with Brent futures jumping 11% to US$77 a barrel. Traders are preparing for another surge in crude prices even as it's unclear where the crisis goes from here. That rise is expected to restart on Monday, after the US assault dramatically raised the stakes in a region that accounts for a third of global oil output. Morgan Stanley's oil analysts said a quick resolution would allow prices to fall back to the US$60s a barrel, but continued tension could leave oil in the current range. 'Fundamental disruptions to the global supply of oil with a possible hit to shipments through the region would push oil prices a lot higher from here,' they said. Meanwhile, the dollar has risen about 0.9% since the conflict started. It's a relatively small move given the US currency's traditional role as a haven in times of turmoil. The US currency has been battered in recent months by Donald Trump's trade and fiscal policies. 'The biggest trade around at the moment is short dollar,' said Birrell. 'No one likes it. But traditionally it's the safe currency people go to, and it might just be that this turns around the fortunes of the dollar.' The reaction was less straightforward in the US$29 trillion market for US Treasuries since the conflict began. Yields initially sank but the moves swiftly reversed over concern about a resurgence in inflation. US Treasuries are, overall, little changed since June 13, with the yield on 10-year notes rising since then by less than two basis points to close Friday at 4.38%. Following are comments from strategists and analysts on how they expect investors to respond on Monday: Emmanuel Cau, head of European equity strategy at Barclays Plc In the very near term, markets may be worried about Iran retaliation, and whether or not it blocks the Strait of Hormuz... Recent crises in the region have shown that the impact on equities from oil shocks tend to be short lived, and usually end up as medium-term buying opportunities. In fact, if the conflict results in bringing more stability and peace to the Middle East, it could be seen as bullish for risk assets over the medium term. Diego Fernandez, chief investment officer at A&G Banco in Madrid 'We expect some risk off, but not an aggressive one. The world may be a safer place without the Iranian nuclear threat, but we still need to see the Iranian reaction and how the conflict evolves.' Anthony Benichou, cross-asset sales at Liquidnet Alpha trading desk Trump couldn't afford for this to drag on. If oil stays elevated too long, especially heading into the midterms, it's a political headache. High gas prices hit Main Street, fuel inflation, and turn voters against you. So the move had to be fast, surgical, and decisive. Note how impressive the risk premium has stayed contained in oil — short-term vols have spiked, but there's been little spillover elsewhere. If Iran were to shut down (the Strait of Hormuz), they'd be cutting off their own main revenue lifeline — effectively speeding up their own collapse. Alfonso Benito, chief investment officer at Dunas Capital It is a very worrisome situation. Investors have some hours to digest the attack before the market opens Monday, and a lot will depend on what Iran does if it responds or not. Anyhow, it's not good. Manish Kabra, head of US equity strategy at Societe Generale SA Equities are likely to only see a shallow drop because central bank policies are much more accommodative than in previous oil shocks. There's also no euphoria in markets in terms of flows. It won't be like we had in 2022 when the S&P 500 and European stocks dropped 20%. Our take is that the Fed may actually ignore any potential oil shocks and that's why I still say there's a good possibility that the S&P 500 will make new highs this year. Anthi Tsouvali, strategist at UBS Global Wealth Management We're definitely in a higher-risk environment than we were on Friday. Markets will react, but probably still modestly in equity markets. We're for sure going to see oil going higher. Investors will also have to think about the impact of higher oil on inflation, and if that's the case, Europe is going to be hit harder than the US. Uncertainty has been very high this year and now this is another event that's added to it. So we'll see some volatility but right now, given the information we have, I don't see that it's going to be long lived. So far, we haven't seen bombings of energy facilities and the Strait of Hormuz hasn't closed. Markets will appreciate that. While there's going to be risk-off sentiment for sure, hopefully it's not going to be long lived or too deep. Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Up until now, the war was very much focused on the Middle East, but with the US's involvement this looks a lot more serious in nature and the risk is really spreading out in a very big way. In terms of markets, we'll definitely see the biggest impact in commodity markets and energy prices are likely to go even higher. We're also likely to see these tensions reverberate across equities. Markets are going to be pricing in a wide variety of possibilities about how Iran is going to escalate. The worst-case scenario would be Iran trying to close the Strait of Hormuz. The first impact would be seen in oil markets and then quickly resonate across stocks and bonds. From an equity market perspective, this is very much risk off. Charu Chanana, chief investment strategist at Saxo Markets in Singapore This marks a turning point for markets. While oil and gold are likely to surge on geopolitical risk, the bigger question is whether US assets can still command a safe-haven premium. Rising fiscal risks, institutional strain, and policy unpredictability could accelerate the fading of US exceptionalism. Trump's decision to bypass Congress adds to institutional concerns, likely putting upward pressure on US yields and questioning the credibility premium once attached to US assets. Beyond the immediate market reaction — higher oil, gold, and volatility — investors will be watching for a potential shutdown of the Strait of Hormuz or retaliation against US naval assets. These risks could drive oil sharply higher, add inflation uncertainty, and test the US dollar's safe-haven appeal amid rising concerns over fiscal dominance and institutional erosion. Shoki Omori, chief strategist at Mizuho Securities Co Capital will race toward classic refuges — Japan government bonds, the yen, Swiss franc and gold. Treasury yields would feel the downdraft almost immediately. History shows that when investors dump dollars, they often scoop up Treasuries, anticipating that the Federal Reserve will lean dovish to steady the ship. A measured statement could keep the greenback steady, but any rhetoric hinting at strikes on US soil or forces would likely jolt it downward. Dollar-yen could edge down to 144. Nick Twidale, chief analyst at AT Global Markets We're going to see a gap higher in gold, yen, Swiss franc and likely the dollar. Gold may shoot up to $3,400 very quickly but the key theme will be volatility — the moves might not stick if, for example, Trump decides the strikes are done. Trump has the bigger stick compared with Tehran, and as such his next move — be it a further escalation or heading back to the negotiating table — will matter more for markets. Gary Dugan, chief executive officer of The Global CIO Office We expect equities to react in a measured way, be it with some downside risk. Markets are not technically overextended with many trading within 3-5% of their 200-day moving averages. Unless we see a significant spike in oil prices we would expect equity markets to hang in around current levels. Nirgunan Tiruchelvam, an analyst at Aletheia Capital in Singapore There are 3 scenarios. A dramatic escalation in Mideast tension: This could see the Strait of Hormuz being blocked and a cycle of revenge. The second is an end to the hostilities in a similar manner that India-Pakistan ended last month. The third is the continuation of the low-intensity bombing by both sides. We expect risk assets to be under pressure under scenarios 1 and 3. Oil and other commodities will also rally under these scenarios. Jason Schenker, president of Prestige Economics The level of fear in global financial markets will hinge on the next wave of actions in and the potential duration of this conflict, and it may take days or weeks before the fog of war clears enough for traders to take outlier positions with significant conviction. As for bonds, the impacts of this conflict could be mixed. While the Fed would have less leeway to cut interest rates due to higher crude oil prices, money leaving equity markets may flood into bonds and Treasuries as safe havens, sending bond prices higher and bond yields lower. Viraj Patel, strategist at Vanda Research This weekend's US strikes are another reason for hedge funds and CTAs to rush towards the exit on their bearish USD bets. We believe one of the biggest pain trades this summer could be a grind higher in the USD as the reasons for being short USD fall by the wayside. There's a perfect storm brewing for non-US equities — especially crowded cyclical European and Asian markets. Rising geopolitical risks are another headwind for global growth on top of the ongoing slowdown in cross-border trade driven by Trump tariff policies (which certain equity markets seem to be ignoring). We believe Europe and EM could underperform here as recent 'hot money' inflows unwind as global investors turn more cautious. See Also: Click here to stay updated with the Latest Business & Investment News in Singapore US strikes on Iran come at fragile moment for global economy US attacks nuclear sites in Iran, widening Mideast conflict Trump says US successfully attacked three nuclear sites in Iran Read more stories about where the money flows, and analysis of the biggest market stories from Singapore and around the World Get in-depth insights from our expert contributors, and dive into financial and economic trends Follow the market issue situation with our daily updates Or want more Lifestyle and Passion stories? Click hereSign in to access your portfolio
Yahoo
22-06-2025
- Business
- Yahoo
Investors set to flock to safety as world awaits Iran's response
(Bloomberg) — Traders are forecasting a drop in stocks, a jump in crude prices and possibly a strengthening of the dollar as investors head for safety in the wake of the US attack on Iran's three main nuclear sites. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice One Architect's Quest to Save Mumbai's Heritage From Disappearing JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Concern that the war will intensify even further is likely to push equity prices lower, while bonds may get a boost, market watchers say. The moves will be bigger if Iran responds with steps such as blocking the Strait of Hormuz, a key passage for oil and gas shipments, or attacking US forces in the region, they say. 'The initial reaction will be a flight to safety and equities will probably be weaker,' said Neil Birrell, chief investment officer at Premier Miton Investors. 'The level that stock markets are standing at, they're definitely going to face increased risk, there's no doubt about that.' Market reaction has been muted since Israel's initial assault this month: Even after falling for the past two weeks, the S&P 500 is only about 3% below its all-time high from February. Investors expect the conflict to be be localized, with no wider impact on the global economy, said Evgenia Molotova, a senior investment manager at Pictet Asset Management. 'But it all depends on how the conflict develops and things seem to be changing by the hour,' she said. 'The only way they take it seriously is if the Strait of Hormuz gets blocked because that will affect oil access.' Iran has vowed to impose 'everlasting consequences' for the bombing and said it reserves all options to defend its sovereignty. Still, downside is likely to be limited because some market participants have been preparing for a worsening conflict. The MSCI All Country World Index has pulled back 1.5% since Israel attacked Iran on June 13. Fund managers have reduced their stock holdings, shares are no longer overbought and hedging demand has increased, meaning a deep selloff is less likely at these levels. The biggest market reaction since the start of the escalation has been in oil, with Brent futures jumping 11% to $77 a barrel. Traders are preparing for another surge in crude prices even as it's unclear where the crisis goes from here. That rise is expected to restart on Monday, after the US assault dramatically raised the stakes in a region that accounts for a third of global oil output. Morgan Stanley's oil analysts said a quick resolution would allow prices to fall back to the $60s a barrel, but continued tension could leave oil in the current range. 'Fundamental disruptions to the global supply of oil with a possible hit to shipments through the region would push oil prices a lot higher from here,' they said. Meanwhile, the dollar has risen about 0.9% since the conflict started. It's a relatively small move given the US currency's traditional role as a haven in times of turmoil. The US currency has been battered in recent months by Donald Trump's trade and fiscal policies. 'The biggest trade around at the moment is short dollar,' said Birrell. 'No one likes it. But traditionally it's the safe currency people go to, and it might just be that this turns around the fortunes of the dollar.' The reaction was less straightforward in the $29 trillion market for US Treasuries since the conflict began. Yields initially sank but the moves swiftly reversed over concern about a resurgence in inflation. US Treasuries are, overall, little changed since June 13, with the yield on 10-year notes rising since then by less than two basis points to close Friday at 4.38%. Following are comments from strategists and analysts on how they expect investors to respond on Monday: In the very near term, markets may be worried about Iran retaliation, and whether or not it blocks the Strait of Hormuz... Recent crises in the region have shown that the impact on equities from oil shocks tend to be short lived, and usually end up as medium-term buying opportunities. In fact, if the conflict results in bringing more stability and peace to the Middle East, it could be seen as bullish for risk assets over the medium term. 'We expect some risk off, but not an aggressive one. The world may be a safer place without the Iranian nuclear threat, but we still need to see the Iranian reaction and how the conflict evolves.' Trump couldn't afford for this to drag on. If oil stays elevated too long, especially heading into the midterms, it's a political headache. High gas prices hit Main Street, fuel inflation, and turn voters against you. So the move had to be fast, surgical, and decisive. Note how impressive the risk premium has stayed contained in oil — short-term vols have spiked, but there's been little spillover elsewhere. If Iran were to shut down (the Strait of Hormuz), they'd be cutting off their own main revenue lifeline — effectively speeding up their own collapse. It is a very worrisome situation. Investors have some hours to digest the attack before the market opens Monday, and a lot will depend on what Iran does if it responds or not. Anyhow, it's not good. Equities are likely to only see a shallow drop because central bank policies are much more accommodative than in previous oil shocks. There's also no euphoria in markets in terms of flows. It won't be like we had in 2022 when the S&P 500 and European stocks dropped 20%. Our take is that the Fed may actually ignore any potential oil shocks and that's why I still say there's a good possibility that the S&P 500 will make new highs this year. We're definitely in a higher-risk environment than we were on Friday. Markets will react, but probably still modestly in equity markets. We're for sure going to see oil going higher. Investors will also have to think about the impact of higher oil on inflation, and if that's the case, Europe is going to be hit harder than the US. Uncertainty has been very high this year and now this is another event that's added to it. So we'll see some volatility but right now, given the information we have, I don't see that it's going to be long lived. So far, we haven't seen bombings of energy facilities and the Strait of Hormuz hasn't closed. Markets will appreciate that. While there's going to be risk-off sentiment for sure, hopefully it's not going to be long lived or too deep. Up until now, the war was very much focused on the Middle East, but with the US's involvement this looks a lot more serious in nature and the risk is really spreading out in a very big way. In terms of markets, we'll definitely see the biggest impact in commodity markets and energy prices are likely to go even higher. We're also likely to see these tensions reverberate across equities. Markets are going to be pricing in a wide variety of possibilities about how Iran is going to escalate. The worst-case scenario would be Iran trying to close the Strait of Hormuz. The first impact would be seen in oil markets and then quickly resonate across stocks and bonds. From an equity market perspective, this is very much risk off. This marks a turning point for markets. While oil and gold are likely to surge on geopolitical risk, the bigger question is whether US assets can still command a safe-haven premium. Rising fiscal risks, institutional strain, and policy unpredictability could accelerate the fading of US exceptionalism. Trump's decision to bypass Congress adds to institutional concerns, likely putting upward pressure on US yields and questioning the credibility premium once attached to US assets. Beyond the immediate market reaction — higher oil, gold, and volatility — investors will be watching for a potential shutdown of the Strait of Hormuz or retaliation against US naval assets. These risks could drive oil sharply higher, add inflation uncertainty, and test the US dollar's safe-haven appeal amid rising concerns over fiscal dominance and institutional erosion. Capital will race toward classic refuges — Japan government bonds, the yen, Swiss franc and gold. Treasury yields would feel the downdraft almost immediately. History shows that when investors dump dollars, they often scoop up Treasuries, anticipating that the Federal Reserve will lean dovish to steady the ship. A measured statement could keep the greenback steady, but any rhetoric hinting at strikes on US soil or forces would likely jolt it downward. Dollar-yen could edge down to 144. We're going to see a gap higher in gold, yen, Swiss franc and likely the dollar. Gold may shoot up to $3,400 very quickly but the key theme will be volatility — the moves might not stick if, for example, Trump decides the strikes are done. Trump has the bigger stick compared with Tehran, and as such his next move — be it a further escalation or heading back to the negotiating table — will matter more for markets. We expect equities to react in a measured way, be it with some downside risk. Markets are not technically overextended with many trading within 3-5% of their 200-day moving averages. Unless we see a significant spike in oil prices we would expect equity markets to hang in around current levels. There are 3 scenarios. A dramatic escalation in Mideast tension: This could see the Strait of Hormuz being blocked and a cycle of revenge. The second is an end to the hostilities in a similar manner that India-Pakistan ended last month. The third is the continuation of the low-intensity bombing by both sides. We expect risk assets to be under pressure under scenarios 1 and 3. Oil and other commodities will also rally under these scenarios. The level of fear in global financial markets will hinge on the next wave of actions in and the potential duration of this conflict, and it may take days or weeks before the fog of war clears enough for traders to take outlier positions with significant conviction. As for bonds, the impacts of this conflict could be mixed. While the Fed would have less leeway to cut interest rates due to higher crude oil prices, money leaving equity markets may flood into bonds and Treasuries as safe havens, sending bond prices higher and bond yields lower. This weekend's US strikes are another reason for hedge funds and CTAs to rush towards the exit on their bearish USD bets. We believe one of the biggest pain trades this summer could be a grind higher in the USD as the reasons for being short USD fall by the wayside. There's a perfect storm brewing for non-US equities — especially crowded cyclical European and Asian markets. Rising geopolitical risks are another headwind for global growth on top of the ongoing slowdown in cross-border trade driven by Trump tariff policies (which certain equity markets seem to be ignoring). We believe Europe and EM could underperform here as recent 'hot money' inflows unwind as global investors turn more cautious. —With assistance from Sydney Maki, Michael Msika, Srinivasan Sivabalan, Abhishek Vishnoi and Jaehyun Eom. Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.
Yahoo
07-06-2025
- Business
- Yahoo
3 cheap, near-penny shares to consider buying in June
The Premier Miton Group (LSE: PMI) share price is down 40% in five years and is well below the 100p level for penny shares. But a modest 2025 rise has pushed the market-cap above the usual £100m limit, but only just. It's an investment management company. And faced with high interest rates and shaky economies, investors have been favouring savings accounts, gold, and safer things rather than stocks and funds. With just £10.4bn in assets under management, this is a sector tiddler. And that has to raise the risk. But the stock was boosted by first-half results. Profit before tax reached £5.4m, and the company held £31.2m cash with no debt. Also by 22 May, 71% of funds were outperforming their sectors. There's a forecast 9% dividend yield, which could be at risk as economic pressures continue. This isn't the safest penny stock out there. But I'd say the recovery potential makes it worth considering. Avacta Group's (LSE: AVCT) a biotech company specialising in diagnostics and therapeutics. The share price had a couple of good Covid years as the company developed test kits. But that's long since faded and we've seen a five-year fall of more than 75%. At around 34p, at the time of writing, it's a penny share on that score. And I don't think the market-cap's too far out at £135m. The main problem's a lack of profit. With full-year results delivered on 6 June, CEO Christina Coughlin said the company's oncology technology 'has the potential to treat up to 90% of solid tumors by repurposing a range of effective oncology drugs to significantly reduce toxicity and side effects.' But it's only just moving towards the Phase 1 trial stage. Results showed a loss from continuing operations of £29m, with cash and equivalents of £12.9m on the books at 31 December 2024. The likelihood of needing more cash seems high. So it's a very risky one. But the rewards could be significant. Worth a closer look, I'd say. I like housebuilders, but AIM-listed Springfield Properties (LSE: SPR) had escaped my eye. We're looking at a market-cap of £112m, with the share price a few pennies below the magic pound threshold. It was up over 170p in mid-2021. The forecast price-to-earnings (P/E) ratio's only 7.5. Revenue fell 13% in the first half, though some blame was directed at Scottish government delays in affordable housing contracts. Scotland? Oh yes, that's were this builder lays its bricks. The report showed higher profits, with a gross margin rising to 17.7% from 14.7%. The company said it has a 'large, high quality land bank'. And it added that the 'long-term fundamentals of the Scottish housing market remain strong'. Net bank debt fell 33%. I'd say the smaller focus means more risk than nationwide builders. But if we're seeing the signs of a new bull run, as I suspect, it could be another cheap stock to consider now. The post 3 cheap, near-penny shares to consider buying in June appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
