Following a significant surge in oil prices, rising nearly 30 per cent, a senior strategist at Global X suggests the Australian Securities Exchange (ASX) is likely to recover from recent losses. Marc Jocum, Global X’s product and investment strategist, notes that historical data indicates strong equity returns often follow sharp increases in oil prices, despite potential short-term market volatility. Global X ETFs is a New York based provider of exchange-traded funds (ETFs). They offer investment solutions across various themes, income strategies, and emerging markets.
According to Jocum, there have been nine instances since the 1980s where oil prices have risen by more than 20 per cent in a single week. Analysing these periods, he found that while the subsequent three months could sometimes be negative, Australian equities generally performed well over the following year. In 78 per cent of those cases, the ASX delivered an average return of 27 per cent.
Jocum highlighted that the exceptions to this trend occurred in 1990 and 2008, coinciding with broader systemic crises such as the Gulf War and the global financial crisis. These events led to sustained market declines, diverging from the typical pattern observed after oil price spikes.
The strategist acknowledges uncertainty regarding the current Middle East conflict, stating it’s unclear whether it will remain a short-lived geopolitical shock or escalate into a more widespread global market crisis. The market’s trajectory will largely depend on the extent and duration of the conflict’s impact on the global economy.
