Investors worry Red Sea disruptions and consumer boycotts could put an end to US stock rally

S&P 500 jitters: While earnings forecasts for S&P 500 companies over the next 12 months are at a record high and have helped the index surpass the 5k mark for the first time earlier this month, the risk of Israel’s war on Gaza further disrupting Red Sea shipping and leading to larger consumer boycotts could potentially upend the index’s historic rally in the event that earnings forecasts have to be scaled back, writes Bloomberg.

A nightmare on Wall Street: Mentions of the Red Sea and geopolitics in American and European companies’ earnings calls have occurred as frequently in the first half of 1Q2024 as during the entirety of 4Q2023, according to data collected by Bloomberg.

ICYMI- Geopolitical uncertainty was the defining feature of forecasts for 2024 at the end of last year. A poll of 500 global institutional investors saw geopolitics as the biggest economic risk in 2024. Almost half of respondents (49%) cited “geopolitical bad actors” as a key concern.

MEANWHILE- Asian markets are mixed this morning as Shanghai opens for the first trading day since the weeklong Lunar New Year holiday. The Shanghai Composite and the Kospi are up, while the Hang Seng and Nikkei have slipped into the red in early trading. Europe looks set to open in the red later this morning, while the Nasdaq, Dow, and S&P look set to open the trading day flat.

THE CLOSING BELL-

The DFM rose 0.5% at Friday’s closeon turnover of AED 328.6 mn. The index is up 4.9% YTD.

In the green: Takaful Emarat (+14.9%), Emaar Development (+4.1%) and Emirates Reem Investments (+3.7%).

In the red: Amlak Finance (-5.6%), Islamic Arab Ins. (-4.8%) and National Central Cooling (-3.6%).

Over on the ADX, the index closed up 0.2% on turnover of AED 862.5 mn, while the Nasdaq Dubai closed up 0.7%.