Global stock markets may face not only a U.S.-Iran war and geopolitical tensions but also a significant climate risk that could emerge in 2027.
Head of Commodity Strategy at Saxo Bank, Ole Hansen, believes that as we approach 2027, there is a high probability of an extremely powerful El Niño event—dubbed a “super El Niño”—occurring. According to Hansen, this could lead to rising temperatures in some parts of the world, a surge in electricity demand, a decline in agricultural yields, and a resurgence of inflationary pressures.
El Niño is known as a climate phenomenon that arises from a sustained rise in surface temperatures in the Pacific Ocean. This phenomenon affects global atmospheric pressure systems, leading to destructive rainfall in some regions and drought in others.
Hansen warned that a potential super El Niño is emerging at a particularly sensitive time. He added that the global economy is still struggling to adapt to the inflationary consequences of conflicts stemming from Iran, while supply chains remain fragile following months of disruptions.
This scenario could prompt investors to reassess their portfolios across many sectors, from agriculture to insurance, and from the energy sector to consumer goods. Rising temperatures could increase electricity consumption, while droughts or extreme rainfall could put upward pressure on food prices. This, in turn, could make central banks’ interest rate policies more complex.
According to projections by the U.S. Climate Prediction Center, there is a 63 percent probability of an extremely powerful El Niño event—defined as a “super El Niño”—occurring by 2027. Analysts note that during a period when global stock markets are trading near historic highs, such a climate shock could emerge as a new risk factor in the markets.
