According to Bloomberg News, it is still in the nascent stage to buy in the prevalent disorder ruling the equity markets as credit spreads escalate and the revision of earnings turn negative, according to the strategists at Credit Suisse Group AG.
European and US stocks are recovering Wednesday following a slump in the current week. Oil was seen rising past $120 per barrel, and inflation continued to remain elevated amidst the Ukraine war. The strategists are saying that there is still room for the equities to plunge further as the cost of oil could escalate from as much as $140 per barrel to $160 per barrel before it peaks.
Geopolitical disorder
According to strategist Andrew Garthwaite, as he mentioned in a note when Iraq invaded Kuwait in 1990, the oil price surged following the two months of the invasion. He also said that as of now, there is yet no upside on the premium model related to equity risk.
Bloomberg News reports that the ongoing Russian invasion of Ukraine has upraised the energy market globally already, with the sanctions imposed on Russia giving rise to fears and compounding worries that there might be a slowing down of economic growth. This conflict could lead to the development of the economy in Europe by as much as 1% in the current year in comparison to what it was in the last year’s forecast, being between 2% and 2.5%, said the strategist.
Bloomberg News reports that further exposure to the non-financial cyclical stocks was reduced within the sectors, including consumers, and adding to small overweight placements in utilities. As per strategists, an overweight call related to European oil companies was also maintained. They emphasized the overweight position in the pharmaceutical industry as it is the largest dollar earner and has always performed the best when business activity shrinks.
