Return to the 2022 stock-market playbook as Iran conflict drags on, say these strategists

Barclays says the chasm between winners and losers is about to get massive A banner depicting Iran's new Supreme Leader Ayatollah Mojtaba Khamenei is displayed on the side of a highway in Tehran on March 10, 2026. Oil shocks from the Iran conflict have a historical precedent that can guide investors, says Barclays. The setup is looking quite different from the weekend, with S&P 500 futures on Tuesday solidly in the green and crude falling further below $90 a barrel on hopes the Iran conflict will end soon. That's after crude rose well into triple-digit territory on Sunday night. Our call of the day says the 2022 Russia invasion of Ukraine can offer investors a valuable playbook. A team of equity strategists led by Venu Krishna at Barclays note one crucial lesson they've learned: When oil prices soar on shocks, betting on the right stocks becomes crucial as the gap between winners and losers widens. Krishna and his team say this was notably seen during the early stages of Russia's invasion of Ukraine in 2022, when oil prices were shocked higher and performance gaps between different investment styles reached "historically elevated levels." "In the period following the outbreak of the war, value emerged as the clear winner, supported by a rotation into cheaper, commodity-linked sectors poised to benefit from surging energy prices. Growth, by contrast, lagged meaningfully, delivering flat returns over the subsequent quarter as macro uncertainty weighed on long-duration assets," they said. Momentum stocks also performed well, though lagged in the wake of oil's abrupt spike before regaining strength as new equity leadership emerged, they said. Other defensive styles found favor, such as large stocks over small, as investors looked for "balance-sheet resilience, cash flow and scale amid heightened uncertainty." Not faring well were quality stocks, even though they offered strong balance sheets and earnings stability. Volatility was also a significant underperformer as investors moved away from speculative, high beta stocks that often see outsize movements, toward more stable names, said the Barclays team. This 2022 playbook provides the backdrop for some fresh moves Krishna and his team are advising on stocks. Firstly, they've turned positive on value stocks, given still-attractive valuations compared to growth and despite recent outperformance and a more inflationary backdrop. They've shifted to neutral on growth names such as durable AI stocks given sensitivity to rising inflation expectations and worries about Fed rate hikes. They remain positive on large over small caps and are negative on momentum, citing higher volatility, oil shock sensitivity and rich valuations. They're also neutral on quality and avoiding high-beta equities. A slightly different take from that 2022 playbook comes from BCA Research, where Jeremie Peloso, chief European strategist, and Robert Timper, chief global fixed income strategist, say investors should focus on protecting their portfolios. "If the 2022 road map is any guide, equity markets and cyclical currencies will trough only after confirming that the peak in energy prices is in the rearview mirror," said the pair. "Reduce exposure to equities, and seek refuge in gold, and inflation-linked bonds." They worry investors have gotten far too complacent, and that even an abrupt move by President Donald Trump to end the war would still result in negative economic ramifications caused by an already too-deep conflict with Iran. "Today, we are facing a much more disruptive shock, considering that 20% of global oil and gas supply is effectively stranded for the time being," said the strategist, saying the current energy shock will be more disruptive globally than that seen in 2022. They are also downgrading U.S. Treasurys from neutral to underweight, saying the U.S. bond market is the only one that is still pricing in Fed rate cuts. The markets U.S. stock futures (ES00) (YM00) (NQ00) are moving higher and West Texas Intermediate crude (CL00) (CL.1) is trading under $90 a barrel. The dollar DXY is lower and gold (GC00) is climbing. The buzz President Donald Trump warned Iran could be hit even harder if it does anything to stop Strait of Hormuz oil flow on his Truth Social social-media account. Hours earlier he predicted the Iran conflict "would end soon," and said sanctions would ease for some countries to help with oil prices. G-7 energy ministers are expected hold talks Tuesday over a possible coordinated release of oil reserves, according to Japan's finance minister. Oracle (ORCL) earnings are due after the market close, and investors are looking for an AI payoff. HPE shares (HPE) are up after the tech group boosted its outlook for networking revenue and saw a big bump in orders for enterprise AI servers. BioNTech stock (BNTX) is sinking after the German drugmaker swung to a loss and said its co-founders are leaving to form a biotech startup. U.S. and Iran predicted a very different war than the one now being waged. Ship clusters and speeding tankers point to Hormuz jamming. YouTube is now the world's largest media company, and it's only getting bigger. The chart The chart from energy research firm Rapidan Energy Group makes the case that the current Iran conflict is the biggest oil disruption in history. Using a proprietary historical disruption database that covers every big supply event since 1950, Rapidan says the so-called Gulf War III has "exceeded any prior disruption by more than 2 times," with regards to the 20% global supply that has been disrupted at a time of 0% spare capacity. "This is not a demand shock. It is a simultaneous supply and buffer shock: the conflict has disrupted both production flows and the spare capacity that markets rely upon to offset disruption," with primary holders of spare capacity, Saudi Arabia and the UAE, basically cut off from global oil markets. Top tickers These were the top-searched tickers on MarketWatch as of 6 a.m.: Scientists say ditch the hasslers if you want to live longer. MarketWatch Picks: Am I still behind? I'm 50 and want to retire at 60. I have $450K saved and will get $1.8K a month in Social Security -Barbara Kollmeyer This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

Return to the 2022 stock-market playbook as Iran conflict drags on, say these strategists

Інші новини компанії