Impacts of Commodity Cycles on Valuations

Commodity cycles have profound implications on the valuations across various sectors, particularly when energy prices rise. Higher costs of natural gas and diesel not only affect energy companies but exert pressure on other sectors by compressing their margins. For example, when energy prices increase, companies in technology and finance may feel the pinch as their operational costs rise significantly. This creates a dynamic where energy companies effectively impose costs on other industries, indicating the interconnected nature of market sectors during cyclical shifts.