Market Update: Staying Calm Amid Middle East Uncertainty

March 2026 | Investment Update

Recent headlines from the Middle East have understandably raised concerns for investors. With ongoing conflict between the US, Israel and Iran, news coverage has been intense — and in times like these, it’s natural to wonder what it all means for markets and your investments.

Here’s our perspective on what’s happening, what history tells us, and how portfolios are being positioned through this period.

Markets are reacting — but not panicking

Despite the seriousness of events, financial markets have so far responded in a measured way. Share markets in major developed economies have fallen by only low single digits, and bond markets have remained relatively stable.

This might feel surprising, but it’s consistent with history. Looking back over major geopolitical events — from the Cuban Missile Crisis to more recent conflicts — markets often sell off initially, then stabilise once the likely scope of events becomes clearer.

What about oil prices and inflation?

Oil prices have risen, largely due to concerns about potential supply disruption in the Middle East — particularly around the Strait of Hormuz, a key shipping route for global energy.

However, there are a few important points of reassurance:

• A significant portion of Middle Eastern oil can still be rerouted through alternative pipelines and ports.

• The global economy is far less dependent on oil than it was during the oil shocks of the 1970s.

• Historically, it takes a much larger and sustained oil price spike to meaningfully derail global economic growth.

Most likely scenarios suggest that while oil prices may remain volatile in the short term, the impact on inflation and economic growth is expected to be modest — unless the conflict escalates significantly or becomes prolonged.

Why the global economy is more resilient today

Today’s economic backdrop is very different from past decades:

• Energy efficiency is higher across most economies.

• Many countries are less reliant on imported oil.

• Corporate earnings remain supported by productivity improvements, technology investment (including AI), and strong balance sheets.

Even in the US, a US$10 rise in oil prices has historically reduced GDP growth by only around 0.1% — a relatively small impact in the broader context.

How portfolios are being positioned

Periods of heightened uncertainty often bring increased market volatility. While that can feel uncomfortable, it can also create opportunity.

Current portfolio positioning reflects a disciplined, long‑term approach:

• Risk assets: Volatility and cautious sentiment may present opportunities to gradually add to growth assets at more attractive prices.

• Fixed income: Shorter‑duration bonds help manage inflation risk, while recent yield moves have improved longer‑term return prospects.

• Currency exposure: The Australian dollar remains supported by domestic economic conditions and interest rate settings.

• Diversification: Alternative and unlisted assets continue to play an important role in smoothing returns and reducing reliance on any single market outcome.

Staying clear‑eyed in a headline‑driven world

Markets can swing quickly when emotions run high. Our role is not built around reacting to every headline, but around staying focused on long‑term goals.

History shows that while conflicts are deeply tragic and unsettling, they rarely derail long‑term investment outcomes on their own. Investors who remain disciplined through periods of uncertainty have often been rewarded as markets recover and move forward.

What should you do now?

For most investors, the most important actions are:

• Stay invested and avoid knee‑jerk decisions.

• Keep your portfolio diversified.

• Review your strategy if your personal circumstances have changed — not because headlines are uncomfortable.

If recent events have raised questions or concerns for you, we’re here to talk. A conversation can provide clarity, reassurance, and confidence in the path ahead.

If you’d like to discuss how your portfolio is positioned, or simply want to talk through what’s happening in markets, please get in touch.