US and Israel strike Iran: Market implications

Recent developments in the Middle East have increased uncertainty in global markets. While the situation is still evolving, financial markets have so far remained orderly. Investors are closely watching three main areas:

• Further developments in the conflict, including whether tensions escalate or remain contained.
• Energy markets, particularly any disruption to oil and gas production or infrastructure.
• Global trade routes, especially shipping through the Strait of Hormuz, a key passage for global energy supplies.

What we’re seeing in markets

• Share markets have experienced modest declines as investors factor in higher uncertainty. Importantly, markets are not currently pricing in a recession or a prolonged hit to company earnings. Moves to date have been measured rather than disruptive. European markets have been slightly weaker due to their reliance on energy imports, while US and Australasian markets have been comparatively more resilient, with New Zealand shares outperforming Australia.
• Bond markets have remained relatively calm, signalling that investors are not expecting a wider financial crisis. The key question for bond markets is whether these developments lead to higher inflation, and therefore potentially higher interest rates.
• Oil prices have risen on headlines, reflecting higher risk premiums rather than actual supply disruptions. Markets are waiting to see whether there is any material impact on production or shipping before reassessing longer‑term implications.
• Currencies – the US dollar has strengthened modestly, which is typical during periods of heightened global uncertainty.

What this means for your portfolio

• Periods of geopolitical tension often lead to short‑term market volatility. This is not unusual, and history shows markets can remain resilient through such episodes.
• Your portfolio is well diversified across asset classes, regions, and risk drivers, which is designed to help manage uncertainty like this.
• We are actively monitoring developments and assessing a range of potential scenarios.
• Staying disciplined and focused on long‑term goals has consistently proven to be the most effective way to preserve and grow wealth through periods of uncertainty.