Could markets sustain the conflict shock?

Описание: Matthew Goodson of Salt Funds highlights the current volatility in equity markets, noting that much of the movement remains on light trading volume. Goodson points out there are no major ASX listed companies with significant direct exposure to oil or gold, making the market reaction to geopolitical risks, particularly in the Middle East, harder to gauge until futures markets provide clearer direction. He identifies energy commodities as a primary focus, especially with potential disruptions in the Strait of Hormuz where around 20% of global oil supply transits, though at this stage, any significant market impact would require more sustained escalation.

Goodson sees precious metals, especially gold, positioned for gains as investors embrace a flight to safety amid uncertainty. This is reinforced by US bond yields rallying despite higher-than-expected core CPI, signifying heightened risk aversion. He also observes that the reaction to earnings results during Australia's reporting season was far more volatile than usual, with minor beats and misses triggering exaggerated share price movements. He attributes this to a greater presence of passive and momentum-driven investors, resulting in more dramatic short-term swings.

Turning to New Zealand, Goodson notes a quieter reporting season with cautious optimism in earnings. While house prices have dropped 10–20% from peak, making real affordability slightly better, general unaffordability persists. Slightly dovish signals from the Reserve Bank have led to lower swap rates and some fixed mortgage rate decreases, but Goodson expects meaningful recovery in residential housing will take longer to play out.