NEW YORK: The prospect of a prolonged Iran war and elevated oil prices is prompting stock investors to reassess a broader array of industries, including less obvious targets from food delivery firms to cosmetics makers as supply disruption intensifies.
Global stocks have lost 5.5% since the conflict began, heading for their worst monthly performance since 2022, with Asia being the hardest hit.
Traders – wary of resurgent inflation and the mounting cost of the war adding to budget deficits – pushed back their expectations for the next US Federal Reserve interest-rate cut to mid-2027.
While airlines and shipping firms are among those that have suffered the most from the conflict so far, defence and energy stocks have benefited.
A major US attack on the island that exports the bulk of Iran’s crude is raising fears of more widespread supply disruptions in the region, further straining oil and gas markets.
As investors brace for wider fallout, attention is turning to previously overlooked pockets of risk – including chipmakers and clothing suppliers – amid concerns ranging from helium shortages to rising raw material costs.
“What began as a contained energy shock is rapidly metastasising,” said Hebe Chen, senior market analyst at Vantage Global Prime.
“The war premium is no longer an energy story – it’s a whole-market repricing, and the secondary victims are only just beginning to surface.”
Semiconductor firms that had been riding the global artificial intelligence (AI) boom are also caught up in the war-induced supply chain disruptions.
Qatar’s closure of a major liquefied natural gas (LNG) plant after an Iranian drone attack has taken about a third of global helium production offline, Bloomberg Economics estimated.
That’s a potential hit to chipmakers since it’s an essential component of production and there’s no ready substitute, according to Bloomberg Intelligence analyst Michael Deng.
Beyond the helium shortage, surging energy prices threaten to dampen demand for semiconductors by driving up the operational costs of AI data centres.
The Philadelphia Stock Exchange Semiconductor Index has shed more than 5% since the conflict started, while Asian chip stocks including Samsung Electronics Co, SK Hynix Inc and Taiwan Semiconductor Manufacturing Co (TSMC) have also fallen.
Meanwhile, shares of helium manufacturer Linde India Ltd have risen.
For now, the impact is expected to be contained.
The margin impact should be modest, given the structural oversupply of helium in recent years and the multiple helium sourcing arrangement, according to UBS Group AG analysts including Sunny Lin.
TSMC has “around six months of safety inventory on hand – so they do not expect it to become an issue in the short term”, said Jefferies analyst William Beavington.
Others, however, are less optimistic.
“Potential disruption to semiconductor supply looks under-appreciated,” said Gary Tan, a fund manager at Allspring Global Investments. “Semiconductor fabrication facilities are among the most energy‑intensive manufacturing facilities in the world and Taiwan and South Korea are heavily reliant on LNG.”
Supply disruptions in the Middle East, where India sources most of its gas, have created acute shortages in its cooking gas market.
As a result, food delivery companies are facing the prospect of slower orders as local restaurants consider shorter operating hours and reducing items on their menus to cope with an acute gas shortage.
That has pummelled shares of Eternal Ltd and Swiggy Ltd as well as Jubilant Foodworks Ltd, a restaurant operator.
Fears of an extended cooking-gas shortage have boosted shares of manufacturers of electric cook-tops, such as TTK Prestige Ltd and Stove Kraft Ltd, as consumers look for alternatives to gas.
Meanwhile, US ride-share and food delivery operators like Uber Technologies Inc, DoorDash Inc and Lyft Inc are facing their own hurdles.
As Bloomberg Intelligence analyst Mandeep Singh pointed out, fuel remains the largest variable cost for drivers, making these companies highly sensitive to oil shocks.
Car makers may also suffer as higher oil prices threaten to stifle consumer demand.
Bloomberg Intelligence’s Steve Man said that of the main US automakers, Ford Motor Co is the most vulnerable because of the disproportionate amount of its revenue that comes from gas-guzzling pick-up trucks.
Toyota Motor Corp and Hyundai Motor Co may face the most impact from the decrease in Middle East sales, as the region accounts for 17% and 10% of their total sales respectively, according to Bernstein analysts including Eunice Lee.
Hyundai shares have plummeted 23% this month, with Toyota down 12%.
The conflict also casts a shadow over Chinese auto exports, for which the Middle East has become a growing destination.
Anhui Jianghuai Automobile Group Corp may be most impacted with 9% volume exposure, followed by SAIC Motor Corp, Chery Automobile Co, Chongqing Changan Automobile Co and Great Wall Motor Co, according to Bernstein.
“Given that the Strait of Hormuz is a critical passage for vehicle and parts shipments to the Middle East, a prolonged conflict and closure of the strait would hurt sales, increase logistics costs, and delay deliveries,” Lee said.
In the retail sector, the pain is twofold.
Rising oil prices drive up distribution costs while simultaneously draining the discretionary spending power of consumers at the pump, according to John Zolidis, president and founder of Quo Vadis Capital.
Shares of US-listed apparel brands and retailers have slid, with Lululemon Athletica Inc, Nike Inc, Macy’s Inc and RH all seeing double-digit drops this month.
Meanwhile on top of the impact on energy supply, smelters in the Middle East saw incoming raw materials and outbound sales of metals disrupted. — Bloomberg
