Henrique Valente, analyst at ActivTrades Europe, told Jornal Económico that the speed at which geopolitical information reaches markets is increasing pressure on investors, requiring them to preserve greater adaptability. The analyst highlighted the importance of liquidity in a context of profound changes and rising sovereign yields, without necessarily implying a reduction in the investment horizon.
Regarding the war in Ukraine, now in its fifth year, Valente believes that Europe has managed, at great cost, to reduce its dependence on Russian gas, but that the slowdown in inflation has not offset the cumulative rise in prices. The increase in energy, cereals and fertilizers prices had a significant impact on industry, transport and the economy in general, also affecting business competitiveness, public spending priorities and families' purchasing power, in a context of greater geopolitical fragmentation.
Oil has once again taken a central role as a barometer of geopolitical risk, especially due to the importance of the Strait of Hormuz, through which approximately 20% of world oil consumption passes. Prolonged disruptions could translate into persistent inflation and lower growth, reinforcing for investors the importance of diversification and maintaining liquidity to adjust the portfolio.
The rise in sovereign yields also constitutes a risk for equity markets, reflecting fears of prolonged high inflation and the growing fragility of public finances in several world powers. Valente warned that if interest rates continue to rise and corporate profits no longer offset this movement, the risk of a correction increases. In risk aversion scenarios, gold may benefit when the main fear is persistent inflation, while US Treasury bonds tend to perform better in the face of recession risk.
