A tangible correction may be ahead in the stock exchanges – Vesa Engdahl: “I fear the worst”

The war between the United States and Iran has not yet ended, the Strait of Hormuz, which is important for oil transport, is not open and the price of oil is high, but the stock market is rising strongly and even setting new records.

“For now, investors do not price any disaster scenario, and the stock market does not price it”, Finlandia Fund Company CEO, Finlandia Group’s Chief Economist Vesa Engdahl stated Kauppalehti directly In the Talousamau program on Friday.

He stated that the stock market is driven up by the earnings announcement season. Both in the USA and in Europe, many companies have reported good and better-than-expected results, and in addition, the profit forecasts for the end of the year have been raised.

“If we still have a situation in the fall where oil costs more than a hundred dollars, inflation accelerates and interest rates rise, I’m very afraid that the profit forecasts will have to be revised downwards,” said Engdahl.

He considers May-June to be a critical period for achieving a ceasefire and peace in the Middle East and opening the Strait of Hormuz. Otherwise, the negative effects of the Middle East crisis may begin to weigh on us.

“The risk and my small fear is that the expectations towards the end of the year turn out to be overoptimistic. If the profit forecasts have to be corrected downwards and the situation turns out to be much worse and no solution can be found, the stock market may face a significant correction,” said Engdahl.

He urges investors to monitor the situation closely. He lists three things that investors should watch now. The first is the geopolitical situation in the Middle East and the development of oil prices, the second is the reaction of inflation and interest rates, and the third is the profit forecasts of companies.

“If in them [tulosennusteissa] it starts to look like they’re cheating, then the worry really starts to grow,” Engdahl snarled.

“But I still dare to be optimistic now that peace will be achieved and things will settle down. But there is a risk that this will not go exactly as it did in Trömsö,” Engdahl concluded.

Friday’s Talousam was hosted by a reporter Heidi Huotilainen.

The financial morning was also visited by Ilkka Hara, the financial director of the lift company Kone, who talked about the gigantic business deal. Iltalehti’s military expert, on the other hand, analyzed the drone threat in Uusimaa early on Friday. You can watch Friday’s Economic Morning in its entirety below.