Damo: If oil prices continue to rise, it will have a significant impact on inflation and threaten the pace at which the Federal Reserve cuts interest rates

The Zhitong Finance App learned that the war between Israel and Iran continues. Morgan Stanley strategist Michael Wilson said that based on historical experience, sell-offs caused by geopolitical events generally last relatively short and moderate, and oil price trends will determine whether market volatility will continue. The weakening dollar and profit growth are supporting the upward trend in US stocks, but if oil prices continue to rise, it will have a significant impact on inflation and the economy, and threaten the pace at which the Federal Reserve cuts interest rates. Stock investors may be nervous. However, he believes that oil prices must rise sharply to form a bear market situation. “Oil prices will rise to 120 US dollars per barrel before they pose a threat to the business cycle.”

“Past geopolitical risk events all caused stock market fluctuations in the short term, but in the 1, 3, and 12 months after the incident, the S&P 500 index increased by an average of 2%, 3%, and 9%.” Damo said that stock investors may have prepared for US intervention in the Iran war and cut their exposure, while demand for hedging increased a few days before the air strike. Even though the stock market only declined moderately, most of the recent volatility was concentrated in the crude oil market. Brandt oil surged more than 20% in June. The latest report was about 77 US dollars per barrel.