Super El Niño may last until 2027, posing new climate challenges for global stock markets

Golden Ten Data reported on June 21 that, aside from the threat of a US-Iran war, stock investors are facing another significant risk: climate risk. This risk is prompting the market to reassess the positioning of multiple sectors, from agriculture to insurance. Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated: “Heading into 2027, the probability of a ‘super El Niño’ event is quite high. This could lead to rising temperatures in parts of the world, surging electricity demand, reduced crop yields, and a renewed surge in inflationary pressures. This could complicate the outlook for central bank policies and pose risks to global stock markets, which are near historical highs. The main concern is that El Niño coincides with a particularly sensitive period. The global economy is still adjusting to the inflationary consequences of the Iran conflict, and supply chains remain fragile after months of disruptions.” El Niño is a climate pattern caused by sustained warming of Pacific Ocean surface temperatures, which can trigger shifts in high and low-pressure systems, leading to heavy rainfall and flooding in some regions and drought and low rainfall in others. The US Climate Prediction Center estimates there is a 63% chance that this could develop into an extremely strong El Niño event by 2027, known as a “super El Niño.”