BlackRock Investment Institute

Macro insights

Energy outpaces global benchmarks

Traditional energy stocks have delivered strong returns amid a difficult start to the year for the broader stock market. See the yellow and orange lines on the chart. As the West seeks to wean off Russian energy, greater demand for non-Russian fossil fuels has pushed up prices, leading investors to expect higher profits from energy producers. Clean energy stocks have also outperformed the broad market since Russia invaded Ukraine (green line) as markets see the drive for energy security, particularly in Europe, as a positive for renewables.

Traditional and renewable

Chart showing clean and traditional energy equities outperforming broad equities since the start of 2022

Past performance is not a reliable indicator of current or future results. Indexes are unmanaged and do not account for fees. It is not possible to invest directly in an index. Sources:  BlackRock Investment Institute, with data from Refinitiv Datastream, April 2022. Notes: The chart shows the total return index for the MSCI World Energy Index, MSCI World Equity Index and S&P Global Clean Energy Index, rebased to 100 at the start of January 2022.

Sustained high fossil fuel prices act like a carbon tax on consumers. Europe now spends over 9% of its GDP on energy, the highest share since 1981. Even before fuel prices surged, wind and solar power were competitive with fossil fuels. Renewables have become even more competitive now that fuel prices are even higher. This should spur Europe toward renewables and electrification. Bottom line: The effective stranding of Russian fossil fuel supply has created investment needs in both traditional energy and renewables.

Recent macro insights

Manufacturers to slow production
Manufacturers have slowed production substantially in both the U.S. and the euro area, according to survey data.
Financial conditions tightening fast
U.S. financial conditions have tightened a lot since the start of the year – in other words, financing is becoming more costly for individuals and companies. Since then, th...
Less optimism on growth
Economic growth forecasts for this year and the next are coming down rapidly. The OECD last week followed the World Bank in downgrading growth forecasts.
Elga Bartsch
Head of Macro Research
Read bio
Nicholas Fawcett
Macro Research

Stay ahead of markets with the latest insights from the BlackRock Investment Institute

Please try again
First Name *
Please enter a valid first name
Last Name *
Please enter a valid last name
Email *
Please enter a valid email
Investor type *
This field is mandatory
Location *
This field is mandatory
Company *
This field is mandatory
Thank you
Thank you for your subscription!
We usually publish weekly insights on every Monday. Expect to receive your first newsletter from us this upcoming Monday.