Summary
- Barclays said global equities are hovering near record highs on expectations for a US-Iran agreement, but that the scope for further gains is limited.
- The reopening of the Strait of Hormuz and easing tensions in the Middle East are key conditions for additional gains, while semiconductor stock valuations have become excessively stretched.
- Markets are being supported by ample liquidity, AI-driven earnings improvement and FOMO buying, but energy shocks, demand risks and the path of oil prices remain the key variables.
Forecast Trend Report by Period
Barclays said room for further gains in equities may be limited even as expectations build for a US-Iran agreement. The bank identified a reopening of the Strait of Hormuz as the key variable.
Walter Bloomberg reported on May 8 that global equities have remained near record highs on optimism over a US-Iran deal, but Barclays sees only limited upside from current levels.
It said valuations for semiconductor stocks in particular have become excessively stretched.
Barclays said any further advance would require the reopening of the Strait of Hormuz and an easing of tensions in the Middle East.
Markets are currently being supported by ample liquidity, AI-driven earnings improvement and fear-of-missing-out buying by investors, the bank added.
Still, it said the energy shock has so far been absorbed through inventory drawdowns, but that buffer is gradually shrinking and demand risks are increasing.
Barclays said a peace agreement could be positive for European equities. Even so, it maintained the US, Japan and emerging markets as its preferred markets.
Investors are watching how developments in the Middle East and the normalization of energy supplies will affect global equities. The reopening of the strait and the path of oil prices remain the main variables.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
