New Delhi. The impact of increasing geopolitical tension at the global level is now visible on the stock markets as well. The fear of war related to Iran and the rise in crude oil prices have forced investors to think. Whereas earlier the concern was considered limited to the energy sector only, now the scope of its influence is increasing. Many sectors, from food delivery companies to the cosmetics and textile industries, could come under pressure from potential supply disruptions and rising costs.
In fact, since the start of the war, global stock markets have declined by about 5.5 percent. This decline is considered to be the biggest in any single month after 2022. Its impact has been most visible on Asian markets. Investors fear that rising oil prices could cause inflation to rise again and that war spending could increase the budget deficits of many countries. Due to increasing uncertainty in the market, traders have now postponed the expectation of interest rate cut by America’s central bank i.e. Federal Reserve. It is now estimated that the next major rate cut will probably not happen until mid-2027. This change has also affected the strategies of global investors.
Airlines and shipping companies have been the first to be affected by the war. Rising oil prices increase fuel costs for airlines, putting pressure on their profits. Similarly, for maritime transport companies, operations also become expensive and the risk in trade routes increases. On the contrary, shares of defense and energy companies are seeing a rise. In times of war and tension, there is a possibility of demand for defense equipment increasing, due to which the shares of defense companies benefit. At the same time, oil and gas companies can also take advantage of higher prices.
The situation became more serious when America launched a major attack on Kharg Island, from where a large part of Iran’s crude oil is exported. After this incident, the possibility of disruption in energy supply in the Middle East region has increased. If this situation persists for a long time, an imbalance between supply and demand may arise in the global oil and gas market. For this reason, investors are now turning their attention to those sectors which were earlier not considered to be much affected by this crisis. Semiconductor companies and textile industries may also be at risk. Shortages of gases like helium could impact chip manufacturing, while rising raw material prices could increase costs for textile companies.