The Israeli-Palestinian conflict is a new risk factor for financial markets, but for now, there’s no contest between US shares and other asset classes as the year moves into its final stretch, based on a set of ETFs through Friday’s close .) is up 13.0% year to date. Although that’s well below the 20% peak for the ETF reached in the summer, this year’s performance premium for American shares remains hefty vs. the rest of the major asset classes.
Note, too, that GMI’s current drawdown is relatively light vs. its underlying component markets. Only US stocks and US junk bonds think the country will avoid a downturn, up from 48% in July.The key question is whether Israel’s military operation, which appears set to invade Gaza, will trigger a wider conflict in the Middle East?
“I have no clue whether markets will remain relatively well behaved,” says Erik Nielsen, group chief economics adviser at UniCredit. “It almost certainly depends on whether this latest conflict remains localized or whether it escalates into a broader Middle Eastern war.”“If the Ukraine war taught us anything, it’s not to underestimate the effect of geopolitics.
In a nutshell, so far so good. Here’s a quick look at the trend in 2024’s S&P 500 EPS: Source: IBES data by Refinitiv 2023 EPS estimates along with Q3 ’23 expectations will be...We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: Include punctuation and upper and lower cases.