Jurrien Timmer, global macro director at Fidelity Investments, states that the ever-changing agenda dominates the financial markets. Despite the fluctuations in the market, Timmer looks at the general picture positively and points out that the atmosphere of panic is exaggerated.
Middle East tension, oil and markets
Timmer points out that the expectation that the tensions over Iran are on the way to a solution is priced in the market. Although crude oil prices have risen above $100, long-term prices in futures contracts are trading significantly lower. This chart reflects that the market considers the current supply shortage to be a temporary problem.
While losses in the S&P 500 index reached around 9 percent at the beginning of the year, the decline rate decreased to 1 percent with the subsequent recovery. In credit markets, spillovers remained limited and no widespread stress was observed in the general financial system.
Timmer states that traditional hedging instruments such as gold and US bonds have recently moved in parallel, unlike normal, and that global capital flows may be effective in this. Especially due to the problems in the Strait of Hormuz, some countries may have converted their highly liquid assets such as gold and US bonds into cash.
Bitcoin, crypto market and investor behavior
The cryptocurrency market reacted with an increase after US President Donald Trump’s two-week ceasefire with Iran. With this development, the oil price decreased by more than 17 percent in one day, and positive movements were observed in the stock markets. Despite this, the price of WTI oil regained its balance above the $100 level.
It was observed that Bitcoin showed a movement style approaching gold, and from time to time, gold exhibited dynamics similar to Bitcoin. After Bitcoin reached 126 thousand dollars last October, there was an outflow from the crypto market with rapid capital movements and the capital shifted to gold. However, when the price of Bitcoin decreased by 50-60 percent from its peak, it was determined that the selling pressure in the market decreased significantly.
While gold appears more open to a retreat after a strong rise, it is reported that Timmer thinks that the $65,000 level technically constitutes an important support point for Bitcoin. According to Timmer, a strong trigger may be needed for a new rise in the market.
At the time of writing, Bitcoin is trading just under $70,000.
Timmer also notes that despite the current geopolitical tension, stocks have not suffered major short-term losses thanks to the strength of company profitability.
The US Supreme Court’s withdrawal of the customs duties imposed last year and the failure to realize artificial intelligence-centered bubble fears were also effective in finding support for the markets. Timmer sees the fact that investors are still cautious as positive for market health.
On the other hand, it is noted that the developments in the Middle East remain uncertain and, in the worst-case scenario, if the energy infrastructure in the Persian Gulf is targeted, there may be serious pressure on global markets. A prolonged disruption in oil supplies passing through the Strait of Hormuz could pose the risk of stagflation.
However, the market has become more mature and cautious towards geopolitical threats in recent years; It is emphasized that short-term panic sales have decreased, especially as low-volume investors move away from the market.
In this period of ongoing economic expansion, investors are recommended to diversify their portfolios and avoid concentrating on single technology stocks. In addition, 10-year US bond interest rates approaching 4.5 percent and related risks are among the important headlines to be monitored.
Timmer states that market fluctuations can present not only risks but also opportunities. Investors who maintain a long-term view and continue to provide liquidity during volatile periods play a stabilizing role in the market.
