AMP’s head of investment strategy and chief economist, Shane Oliver, said local investors would be waiting to see how Iran responds to US bombing in the country on Sunday (AEST).
“Ultimately, it all depends on how Iran responds. There’s a tendency to assume that any military operation in the Middle East is disastrous for share markets. Oil surges – and that’s bad news for super funds – but historically, it’s never been that clear,” Oliver said.
“If Iran retaliates by attempting to disrupt the supply of ships through the Strait of Hormuz or attacks other oil producers in the region, then oil prices could push through $US100 a barrel and you’d see very sharp falls in share markets in the next few days.”
On the other hand, if Iran agrees to Trump’s demands, then markets should settle after an initial dip, although disruptions to shipping could see negative impacts on markets for weeks or months, Oliver predicts.
Big super funds are major investors in the US, and last week the $240.8 billion Future Fund warned the US had become a riskier investment destination and is likely to attract a smaller share of global capital flows.
In a speech delivered to the American Chamber of Commerce in Australia earlier this month, the chair of the Australian Securities and Investments Commission, Joe Longo, highlighted the significant exposure of super funds to American assets including infrastructure projects, data centres and the US energy and technology sectors.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
