JP Morgan analysts on slower inflation – say that firms that benefited from the inflationary spike in the past two years may lose the power to charge higher prices for their goods and services, which is a headwind for their stocks and the equity markets in the remainder of 2023.
However, the analysts argue that rising energy inflation is likely to have the same impact:
- rising oil prices could lead to demand destruction, another headwind for corporates’ pricing power
More on the oil price from the note:
- only around 25% of the rise in the oil price is demand-driven
- the larger portion of the spike is supply cutbacks by OPEC+
- says that if oil sustains the rally companies might not be able to pass on rising input costs as easily as they did in the past two years, hitting margins
This article was originally published by Forexlive.com. Read the original article here.