Reshma Kapadia
Signs of a deal between the U.S. and Iran for a 60-day cease-fire gave investors enough optimism Monday to find markets poised to benefit if the conflict actually ends.
Stock markets have whipsawed in the last couple months as interim deals and talks of cease-fires fell apart. But strategists saw the memorandum of understanding -- announced by both sides -- and the Friday signing date as signs escalation risks were falling.
That, in turn, would mean less risk of a global recession triggered by energy price spikes as oil inventories run low.
While gas prices have risen in the U.S., much of the pain has been borne by energy and fertilizer exporting countries abroad, especially in Asia, and those markets were seeing signs of a reprieve Monday.
The MSCI Emerging Markets ex-China was up 3%, Monday, double the S&P 500's 1.5%. Some of the biggest beneficiaries of peace will be countries such as South Korea, Indonesia, and India that relied on the Gulf not just for oil imports but also fertilizer, natural gas, helium -- and in instances like India -- for remittances.
In a note to clients, Yardeni Research wrote that foreign equities should outperform, resuming their trajectory at the beginning of the year before the Iran conflict. The iShares MSCI All Country World Index ex-USA was up 1.5% to $76.74. Another boost for foreign stocks: a possibly weaker dollar if oil prices ease.
Within emerging markets, India has been one of the bigger losers, and any signs of an end to the conflict would serve as a catalyst for the iShares MSCI India ETF.
Once investors get some clarity on whether the cease-fire will last, Rohit Chopra, a manager on Lazard's emerging markets equity team, said the United Arab of Emirates and Saudi Arabia will be of interest as both will likely focus on their efforts pre-conflict to industrialize.
"If anything, we will see a greater acceleration in those investments," Chopra said.
Others like value-oriented Louis Lau, a member of the Brandes emerging markets investment community, sees banks as a good way to tap that opportunity, including Saudi National Bank. The iShares MSCI Saudi Arabia ETF, which owns the bank in its top three holdings, was down 0.55% at $38.58 and the iShares MSCI UAE ETF rose 3.5% Monday.
There is also an opportunity in commodities. The closure of the Strait of Hormuz has intensified a push by countries and companies to shield themselves from potential bottlenecks for critical supplies by bringing production home, diversifying, and hoarding resources.
Louis Gave, head of Gavekal, noted this move to "just in case" versus "just in time" supply chains likely means countries will look to hold larger commodity stockpiles, not to mention rebuild the oil inventories they have drawn on in recent months.
Most geopolitical strategists think it is going to take time for oil and other shipments to regain momentum as the road to peace will be bumpy. But Gave sees a pullback in commodity prices as the Strait of Hormuz reopens as short-lived because of the conflict's long-term ramifications will push countries to increase reserves of key inputs.
One way for investors to tap increased demand for commodities is the Invesco DB Commodity Index Tracking Fund, which was down 1% to $28.22 on Monday.
That could be a buying opportunity for those critical commodities and also alternative energy sources that will see increased demand as countries think up better backup plans.
"In recent weeks, some of these very assets -- especially all things nuclear, but also coal and even solar -- have been taken to the woodshed. This recent selloff probably provides an attractive opportunity," Gave says.
Write to Reshma Kapadia at reshma.kapadia@barrons.com
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(END) Dow Jones Newswires
June 15, 2026 16:12 ET (20:12 GMT)
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