The market reaction to the war in Iran has grown sharper, pushing investors to reassess risk as oil rises and safe-haven trades build. On Fox Business’ The Claman Countdown, Cantor Fitzgerald chief equity and macro strategist Eric Johnston weighed the crosscurrents on stocks and explained why software could be tested as volatility returns.
Johnston spoke as investors tried to read the next moves across energy, tech, and rates. The discussion focused on near-term positioning and how longer conflicts tend to ripple through earnings, valuations, and liquidity.
Eric Johnston “discusses how the war in Iran is impacting markets and shares his outlook on software stocks amid ongoing volatility.”
Geopolitics Reopens the Energy and Inflation Debate
New conflict risk in a key oil-producing region often lifts crude prices and freight costs. That can filter into headline inflation and real income, and it can complicate central bank plans. Investors have seen versions of this before, from the Gulf War to flare-ups that briefly tightened supply.
Higher energy prices can aid producers and services firms tied to drilling and transport. Airlines, chemicals, and parts of retail may face pressure as fuel costs rise. Bond markets may pull forward or push back rate-cut expectations depending on how inflation risk compares with growth risk.
Johnston’s remarks point to a market trying to balance those forces. He framed the near-term setup around defense, energy, and cash-flow quality, while warning that confidence can swing quickly when headlines shift.
Volatility Tests Tech Leadership
Software has led major indexes in recent years on margin expansion, recurring revenue, and the promise of AI-driven demand. But software is also interest-rate sensitive. When bond yields jump on inflation worries, valuation pressure can build fastest in long-duration assets like high-growth applications and infrastructure software.
Johnston examined how renewed volatility may hit that group unevenly. Profitable platforms with net cash and clear pricing power tend to hold up better. Companies reliant on aggressive growth assumptions, or heavy stock-based pay, can see faster multiple compression when rates rise and risk appetite fades.
He outlined a practical screen for the coming weeks: focus on balance sheet strength, renewal visibility, and customer concentration. Watch enterprise budgets for signs of deferral or elongating deal cycles if macro uncertainty intensifies.
What Could Break the Stalemate
Markets often settle when three elements become clearer: conflict duration, supply disruption, and policy response. A short conflict with limited supply impact can see oil settle and risk assets stabilize. A prolonged disruption could pressure consumer demand and margins.
Policy response matters. If inflation expectations stay anchored, central banks can focus on growth and financial stability. If expectations drift higher, they may keep rates elevated longer, which would weigh on rate-sensitive stocks.
- Energy up, defensives bid: near-term cushion for cash-generative sectors.
- Software dispersion: quality outperforms story-only names.
- Bonds volatile: path of rate cuts re-priced week to week.
Multiple Viewpoints on the Path Ahead
Some investors argue that software demand is durable, with AI and security spend treated as essential. They see pullbacks as chances to add to high-quality platforms. Others point to tightening IT budgets and crowded positioning in mega-cap tech, raising the risk of longer drawdowns if earnings guidance softens.
Johnston’s stance threads the middle. He recognizes the long-term case for select software leaders, yet he highlights the near-term drag from higher rates and headline risk. He stressed patience on entries and the value of hedges while correlations rise.
Signals to Watch
Investors are tracking refinery outages, tanker routes, and insurance costs to gauge real supply strain. They are also reading management commentary for changes in pipeline conversion and renewal pricing. Options markets offer a quick read on stress as skew and implied volatility move with headlines.
History suggests that clarity, even if negative, often reduces volatility. Clearer information on supply and policy can allow investors to reset positioning and refocus on earnings rather than headlines.
The takeaways are straightforward. The war has shaken confidence, lifting energy and haven demand. Software remains a leader but faces a tougher tape as rates stay high and risk swings widen. Johnston’s message was to prioritize quality, keep dry powder for dislocations, and let price reveal where fundamentals remain strongest. The next few weeks should show whether inflation fears fade, or whether prolonged tension forces a deeper reset in growth valuations.
