Geopolitical Risks on the Rise

Financial markets around the world are increasingly being pushed and pulled by geopolitical dynamics. J.P. Morgan Research highlights the key, market-moving risks to watch out for.

April 10, 2019

Heightened geopolitical risk has become the new normal, with uncertainty surrounding policy, international relations and political leadership now a driving force behind financial market volatility and sentiment. In this report, the J.P. Morgan Research team takes a closer look at some of the main themes and sources of increased geopolitical risk and how these risks could impact markets.

Major Geopolitical Tail Risk Scenarios for 2019

China
Global
India
Iran/Saudi Arabia
North Korea
Russia
Venezuela
U.K.
U.S.
Trade war with China aggravates late-cycle forces U.S. Hard Brexit U.K. No solution to military conflict in eastern Ukraine, U.S. imposes additional sanctions, Putin tests U.S.-EU unity Russia Peace talks collapse and trigger Korean act of war North Korea Trade war leads to further market declines; U.S. responds to activity in South China Sea China Q2 2019 elections produce fractured coalition that does not advance Modi reforms India U.S. sanctions trigger oil supply shock that Saudi cannot offset short-term, pushing Brent towards $100 per barrel Iran/Saudi Arabia Hyperinflation sanctions accelerate oil supply decline, pushing Brent towards $85 per barrel; emigration destabilizes neighbors Venezuela Cyberattacks cause economic disruption Global mobile-map-block Created with Sketch.