Global financial markets are predicted to experience a swift and significant selloff if the United States engages in direct military action against Iran, according to Nigel Green, CEO of deVere Group. In a statement released today, Green cautioned that the relative stability seen in recent weeks, despite escalating Middle East tensions, would likely be shattered if the U.S. became directly involved.
According to Green, investors are currently anticipating rate cuts and stable energy prices, but a sudden expansion of the conflict would trigger a forceful repricing of risk across major asset classes.
Oil prices have already risen nearly 9% since Israel’s initial strikes on Iran, signaling concerns about potential supply disruptions. A direct U.S. intervention could further escalate crude prices, especially if key infrastructure or shipping lanes are affected.
Green noted that the global economy is not well-positioned to withstand another energy shock, which could lead to shifting inflation expectations and fading interest rate cut hopes, creating a double blow for equities.
The U.S. dollar has recently strengthened against the yen and Swiss franc, while Treasury yields have dipped, indicating a cautious shift toward safer assets among investors. deVere Group suggests that these movements could accelerate sharply if the U.S. formally enters the conflict.
Green stated that equity markets would react immediately upon U.S. involvement, driving a rapid shift in sentiment and positioning. High-beta stocks, tech, emerging markets, and risk-sensitive currencies are expected to be the first affected.
He also highlighted that the timing of a U.S. strike could amplify the shock, potentially widening gaps, drying up liquidity, and deepening losses if it occurs suddenly or outside regular trading hours.
deVere analysts suggest that markets appear unprepared for a broader war, with investor behavior still reflecting optimism and high allocations to risk assets.
Green warned that the initial market reaction would be fast and disorderly, dragging down assets indiscriminately.
While markets have shown early signs of caution, deVere anticipates a dramatic shift in tone should the U.S. take military action. The firm advises investors to review portfolios, prepare for heightened volatility, and maintain long-term discipline, emphasizing that the impact of geopolitical shocks can be mitigated with proper risk management and asset allocation.
Central banks will also be closely monitoring developments, and a significant rise in oil prices could force them to pause or reverse expected rate cuts, further pressuring equities and credit.
As investors closely monitor signals from Washington, deVere anticipates a sharp, global market reaction if the U.S. becomes involved, urging investors to stay ahead of potential developments.
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