Equities May Deliver Weaker Returns for Years, Oil Price Could Reach $150-$200: Analyst Shankar Sharma Predicts

Global Markets Report

Market Outlook Equity markets are likely to experience a prolonged phase of weaker returns before stabilizing, according to Shankar Sharma. Markets may have already started adjusting to the strong gains seen earlier, with 1.5 to 2 years of weaker returns behind us.

Returns Projections Sharma predicts that there are 2 more years ahead of us before we normalize overall long-term returns to a more average number of 10%, which is in line with nominal GDP growth. This suggests a potential 20% decline in returns over the next 2 years.

Risk Factors Rising crude prices pose a significant risk to global markets, particularly amid escalating geopolitical tensions. Sharma believes that oil prices may be entering a structural bull market, driven by the commodity's prolonged period of relative cheapness.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Oil Price Projections The ongoing geopolitical conflict may lead to higher oil prices, potentially reaching $150 or even $200 per barrel. This could be driven by a comparison with the rally in gold prices, where a prolonged period of cheapness led to a significant price increase.

Geopolitical Tensions The ongoing conflict in the Middle East may not be resolved quickly, according to Sharma, who is currently based in the region. This suggests that the situation may persist for an extended period, leading to further market volatility.