Column-Inured to edgy geopolitics, markets deflect risk :Mike Dolan
© Reuters. FILE PHOTO: A trader works on the floor of the New York Stock Exchange in New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File PhotoLONDON - The modest reaction of global markets to the shock of another Middle East war says more about an investment world already braced for more turbulent times than nonchalance per se.
"The conflict is likely to remain within Gaza and the West Bank," Amundi's chief investment officer Vincent Mortier and head of geopolitics Anna Rosenberg wrote."The impact on markets should be limited as long as the conflict remains local." "The real price of oil is already elevated, it is hard to imagine anything like a tripling from today's level and the global economy is far less oil intensive than it was."These investors go on to list a welter of less likely though possible escalations that could drag in more globally significant actors or energy-sensitive players such as Iran, the United States, Saudi Arabia or even Russia.
It's possible the macro investment world may have become more comfortable and blase about geopolitical risk after several years of dramatic twists - U.S. trade tariffs on China, a pandemic that triggered a wave of economic nationalism and supply chain reordering, Russia's invasion of Ukraine and the linked concern that China may do likewise in Taiwan.
"Geoeconomic fragmentation has also led to a sharp increase in the dispersion in commodity prices across regions, including critical minerals," IMF chief economist Pierre-Olivier Gourinchas said."This could pose serious macroeconomic risks."
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