Markets don’t like uncertainty, and an escalating conflict in Iran has created plenty of it.
Whenever tensions rise in the Middle East, investors immediately worry about oil supply, inflation and the risk of a broader regional war. That concern quickly feeds into markets. Oil prices move higher, share markets become volatile and safe haven assets such as gold strengthen.
We’ve seen this pattern of geopolitical uncertainty many times before.
When Russia invaded Ukraine in 2022, global markets fell more than 10% in the early months. During Brexit in 2016, markets initially dropped sharply before stabilising and recovering. Last year, surprise US tariffs triggered another swift sell off of around 20% in US shares in just a month.
Each episode felt significant at the time. Each generated headlines predicting deeper trouble ahead. And each one eventually faded as markets adjusted and moved forward.
What’s driving markets
The key transmission channel from Iran into markets is energy. The region is central to global oil production and transport routes, so any perceived disruption pushes oil prices higher. Over the weekend crude oil prices rose around 6.6%. While that’s a sharp short term move, swings of this magnitude are not unusual during geopolitical flare ups.
Higher oil prices feed into inflation expectations, which in turn affect interest rate forecasts and economic growth assumptions. That chain reaction is what markets are processing.
It’s important to separate the very real human cost of conflict from the way markets respond. While geopolitical events often trigger short term volatility, their longer term impact on diversified investors has historically been limited. A Vanguard study of 22 major geopolitical events found that, on average, markets delivered positive returns 12 months after the initial shock.
That doesn’t mean markets rise immediately. It does mean that panic selling has rarely proven to be a good long term strategy.
Australian shares have been resilient
It’s also worth noting that Australia’s share market has been relatively resilient so far. Thanks to our geographic isolation and our exposure to commodity producers like BHP, higher energy and resource prices can actually support parts of the local market. When oil and other commodities rise, Australian resource companies often benefit.
As a result, the Australian market remains within around 1% of its all time highs, even as some global markets have experienced sharper swings.
That resilience doesn’t mean we wont see some volatility, but it highlights the benefit of being diversified across regions and sectors rather than relying on a single economy.
How your portfolio is positioned
The Stockspot portfolios are spread across thousands of companies in Australia, the US, Europe and emerging markets. They also include defensive assets such as bonds and gold, which are designed to behave differently to shares during periods of stress.
When share markets fall, gold often rises as investors look for stability. Over the past week it’s climbed around 5% as geopolitical tensions have intensified.
Bonds can also provide support when growth expectations weaken. And because our global shares are largely unhedged, a falling Australian dollar can cushion global share market declines for local investors.
No single asset determines your outcome. The strength lies in the combination.
Automatic rebalancing in action
Volatility can feel uncomfortable, but it also creates opportunity.
When markets move sharply, some assets drift away from their target weights. Our automated rebalancing process monitors those movements and steps in when they become meaningful. If shares fall and gold rises, the system trims what has outperformed and adds to what has become cheaper.
This disciplined approach is difficult to apply emotionally in real time. It can feel uncomfortable to buy when headlines are negative. Automation removes that hesitation and ensures your portfolio continues to align with its long term strategy.
You don’t need to decide when to buy the dip. You don’t need to predict how the conflict will evolve. The portfolio management process is already responding in a measured and systematic way.
What you should do now
It’s natural to feel unsettled when headlines are dramatic. But in practical terms, there’s nothing you need to change.
Selling during uncertainty requires you to correctly time both your exit and your re entry. Even professional investors struggle to consistently get those decisions right. That’s why we don’t adjust strategic asset allocations based on news headlines.
Instead, we stay invested, remain diversified and rebalance when required.
If you’re making regular contributions, market dips can actually improve long term outcomes because new investments are made at lower prices. Over time, this lowers your average cost and strengthens compounding.
Even when prices fluctuate, your investments continue to generate dividends and income. Those distributions are reinvested, which supports recovery when markets stabilise.
Final thoughts
The conflict in Iran is serious, and the humanitarian impact matters far more than daily market movements.
From an investment perspective, your portfolio was built with uncertainty in mind. It’s diversified across regions and asset classes. Defensive assets like gold are playing their role. Automated rebalancing is quietly maintaining discipline.
There’s no need to react to headlines or make changes to your portfolio.
Whether it’s your investments or your super, the most powerful thing you can do is stay calm and stick to your plan. That discipline is what protects and grows your wealth over time.
If you have any questions about your portfolio, our team is always available to help.
