Be Aware: Trump's Policies and Conflict Could Rattle Investor Portfolios
Potential implications of U.S. military intervention for financial investors
By Christina Lohner
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It's crucial for investors to tread carefully amid escalating global issues, but not just due to tensions in the Middle East.
Politics "Maybe, maybe not" Trump jokes about US military intervention
That said, renowned capital market expert Stefan Riße believes investors have little reason to panic about their portfolios, as the US's military might and Iran's vulnerabilities could cap the impact on stocks, should the US strike in the ongoing conflict between Israel and Iran. With the US's aerial supremacy, other countries in the region are unlikely to pose a challenge to American forces, according to Riße. He anticipates that a regional conflagration is unlikely. "There won't be a sudden spike in oil prices," Riße told ntv.de.
However, potential complications may arise if naval vessels cannot pass through the Strait of Hormuz, leading to temporary delays in oil deliveries. While a four-week disruption seems probable, only China seems to be significantly affected, as it relies on more oil from Iran than Western countries. China could offset the shortfall by boosting its imports from Russia. Economically, the situation does not appear to be calamitous.
"We've witnessed this in previous conflicts - the Gulf War, the Iraq War, and Israel's wars - in the end, everything settles down," Riße points out. He doesn't envision nuclear power Pakistan as a threat to the US in the region.
Investors Should Worry About Inflation and Trade Wars
Riße sees the unresolved US trade war as a more pressing concern for the stock market. He warns that rising inflation rates could become an issue in the coming months, and the surge in oil prices could exacerbate the issue. While a tariff-induced deficit of farmworkers poses concerns for the upcoming harvest season, the lack of immigrants due to policy changes is also adding to overall uncertainty, resulting in a significant reduction in investments.
"I wouldn't personally sell my stocks due to the Iran conflict," Rièse says. "But we're naturally more cautious right now." High-value stocks and indices are overvalued, so growth may be limited in the coming years.
Economy Navigating the dual threats of trade tensions and Middle East conflict
In essence, while the Iran conflict poses risks to the stock market due to geopolitical uncertainty, the US trade war poses a more significant risk due to the potential for inflation and reduced investment. The inflated oil prices, exacerbated by Trump's tariffs and immigration policies, could worsen inflation. Furthermore, the ongoing uncertainty surrounding the US trade policies and immigration practices could further dampen investment sentiment.
Source: ntv.de
- Stock Prices
- USA
- Iran
- Middle East Conflict
- Despite the potential impact of the Middle East conflict on investor portfolios, Stefan Riße, a capital market expert, believes that the US's military might and Iran's vulnerabilities could limit the impact on stocks, but he views the unresolved US trade war as a more pressing concern due to the potential for inflation and reduced investment.
- In the face of the dual threats of trade tensions and Middle East conflict, investors should worry about rising inflation rates, surges in oil prices, and the impact of tariffs and immigration policies on investments, as these factors could significantly affect stock prices and the overall health of the economy.
