- A renewed escalation in hostilities could trigger significant market disruption, including a potential 10% decline in global equities, a widening of credit spreads by 100–200 basis points, and tighter global monetary conditions – Fitch Ratings
Fitch Ratings has identified 72 sub-sectors across six global regions that could remain vulnerable if the conflict in the Middle East continues or escalates further.
In a recent report, the agency said it is reassessing risks linked to Iran for global corporate sectors, updating its “negative scenario” based on recent developments and sector performance.
It noted that the fragile nature of the 60-day interim agreement, along with Israel’s non-participation, means geopolitical tensions in the region remain a key risk factor for businesses worldwide.
Fitch added that a renewed escalation in hostilities could trigger significant market disruption, including a potential 10% decline in global equities, a widening of credit spreads by 100–200 basis points, and tighter global monetary conditions.
The agency also warned that such a scenario would likely result in weaker-than-expected global economic growth.
The report further highlighted that both US corporate bonds and emerging market debt would face increased pressure under heightened geopolitical stress, reflecting rising investor risk aversion.
Overall, Fitch stressed that ongoing uncertainty in the Middle East continues to pose a systemic risk to global financial stability, particularly if diplomatic efforts fail to hold.
