Stock markets are confidently betting that the oil crisis that unfolded is almost over. They set aside a few weeks for Iran to allow oil shippers through the Strait of Hormuz.
Unfortunately, the U.S bombed military targets on Kharg Island. Though President Trump did not attack oil infrastructure, Iran might strike back. Iran said that if the U.S. struck its oil and energy infrastructure, it would retaliate. Iran would target U.S.-linked energy facilities in the area.
Kharg is strategically important in Iran’s crude export operations. Most of its oil experts go to China.
WTI crude closed at $98.71 over the weekend. Before the war, it traded in the range of around $55 - $75.
Consumer discretionary firms are pricing in higher energy costs to hurt their profits. Procter & Gamble (PG) fell by 13.82% from its 52-week high, closing at $150. Mondelez (MDLZ) lost ~11% in the last month. Colgate-Palmolive (CL) and General Mills (GIS) are also notably weak-performing stocks in the last year. By comparison, Dollar Tree (DLTR) gained 63%. Markets expect consumers to flock to low-priced goods amid rising inflation.
In the food sector, PepsiCo (PEP) pulled back, as did Coca-Cola (KO) and Keurig Dr. Pepper (KDP).
Energy firms like ConocoPhillips (COP) and BP (BP) traded at fresh new highs.
