El Niño is putting climate risk back into focus for investors, with potential consequences for agriculture, commodities, energy infrastructure, and emerging markets. While El Niño is a cyclical climate pattern involving warming Pacific Ocean waters that disrupt weather patterns worldwide, this year’s El Niño is predicted to be the strongest on record.
El Niño can be seen as both a macroeconomic risk as well as an investment opportunity. Investors could potentially benefit from higher prices in commodities such as sugar, cocoa, copper, and precious metals, while countries and companies exposed to agriculture, hydroelectric power, shipping, and food costs could come under pressure as disruptions to weather patterns affect global crop yields and transportation routes.
In addition, rising inflation, Treasury yields, and potential Federal Reserve rate hikes could add another layer of pressure to markets. Hear more from Jeff about all of this from the NYSE.
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