This is how it went with the tone-setting indices:
- The S&P 500 ended up 0.78 percent
- The Nasdaq Composite rose 1.29 percent
- The Dow Jones rose 0.49 percent
Investment director Robert Næss at Nordea Markets believes that the market is currently taking the Middle East conflict in stride.
– It seems quite relaxed. The worst-case scenario is that oil prices remain high for a long time, that we get more price increases and higher pump prices in the US, which dampens consumption. But that is not what the stock market is pricing in now, says Næss to E24.
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Oil prices, which have skyrocketed since the outbreak of war, calmed somewhat on Wednesday after US Treasury Secretary Scott Bessent said that Washington will roll out a series of measures to stabilize oil transport through the Persian Gulf, reports CNBC.
– We have a number of announcements we are going to make, Bessent told CNBC on Wednesday.
Oil prices have fallen back during the day. A barrel of North Sea oil (burnt spot) traded at $81.64 at the close, down $0.29 since midnight. At the highest level, a barrel of North Sea oil traded for $84.32.
President Donald Trump said Tuesday that the United States would offer insurance to tankers in the Gulf and, if necessary, allow the Navy to escort them through the Strait of Hormuz.
Næss believes that the investors are largely playing on what he refers to as the “Taco trade” linked to President Donald Trump.
– The market is pricing in that the “Taco trade” still applies. In other words, if Trump sees that this is not going his way, then he will find an explanation as to why he is giving up. A long-term situation with high oil and gas prices has not been priced in, says Han.
Investment director at Nordea Markeds
According to Næss, a sustained high oil price could quickly become a political problem for Trump.
– It is a crisis for him if the oil price remains high for a long time. High petrol prices strike a chord with voters, and with the mid-term elections in sight, it is something the Republicans will benefit from very little, adds Næss.
At the same time, Næss points out that neither party benefits from a long-term escalation.
– There is a crisis for Trump if oil prices remain high for a long time. At the same time, there is a limit to how long Iran can live without oil revenues if the Strait of Hormuz is closed. All actors are dependent on a quick solution, even if they don’t say it out loud, he says.
Tek rise
Several of the so-called “Magnificent Seven” shares rose on Wednesday, despite geopolitical unrest. Robert Næss believes that the upswing is primarily about general optimism, not the development in oil prices.
– I don’t see any direct link to oil. It is more about the market being optimistic, he says.
Alphabet is among the exceptions. According to Næss, this may be because the share has been strong at the forefront.
– There has been a lot of enthusiasm around the company’s AI investment. At the same time, competitors have impressed in recent weeks, and then some of the party may have been taken in advance, he says.
Næss also points out that the pricing of some of the largest technology companies is not necessarily as high as many people think.
– Nvidia is traded at around 21 times expected earnings for the next twelve months. Given the earnings growth, it is not particularly high, he says.
At the same time, he emphasizes that much of the optimism is already reflected in the expectations.
– The analysts expect almost a doubling in earnings. The question is whether we are approaching a peak level. When growth levels off, the market can become more uncertain, says Næss.
This is how the “Magnificant Seven” shares are doing:
- Alphabet ended down 0.036 percent
- Amazon rose 3.88 percent
- Apple ended down 0.47 percent
- Meta rose 1.93 percent
- Microsoft ended up 0.31 percent
- Nvidia rose 1.66 percent
- Tesla rose 3.44 percent
Bank of America has upgraded Tesla to a buy recommendation after a pause in coverage of the electric car manufacturer. Previously, the bank had a hold recommendation on the stock, reports CNBC.
Analyst Alexander Perry has set a price target of $460, which corresponds to an upside of 17 percent from today’s level. Tesla shares have fallen 13 percent so far this year.
Perry believes Tesla is the leading player in self-driving cars and expects the company to quickly become a leader in robotaxi services.
– We expect Tesla to quickly become a leader in robotaxi services, given the company’s ability to scale more profitably than its competitors, writes the analyst in a report on Wednesday.
