The Iran-Israel standoff, intertwined with US involvement, has injected chaos into financial markets. Shares tumbled as traders sought refuge in gold, silver, and surging oil. The Hormuz Strait blockade threatens 20% of global energy flows, persisting into its fourth day. Gulf aviation ground to a halt, with Dubai and Doha airports shuttered and carriers like Emirates and Qatar Airways slashing schedules.
Market watchers predict choppy waters ahead from this geopolitical storm. UBS, however, urges calm. In a client note, Mark Haefele from UBS Global Wealth Management predicts supply hiccups will be brief. Oil’s rally should ease once infrastructure damage is ruled out.
Drawing from history, Haefele notes geopolitical jolts rarely cause lasting harm. Knee-jerk de-risking has historically underperformed. Stick to long horizons, hold diversified equities, and buy the dip to broaden exposure—that’s UBS’s playbook.
Military flare-ups may weigh on stocks short-term, but fundamentals shine: America’s resilience, solid profits, and fiscal stimulus worldwide point to a 10% market climb by late 2026. Optimism spans regions—US, Europe, Japan, China, EMs—with Asia’s China tech, India, Australia, and Japan as rebound engines.
Look to commodities in 2026, especially gold and silver. Actively managed plays could thrive in volatile West Asia. A modest gold slice in portfolios guards against shocks; pair it with premium bonds and hedges for stability.
Oil-driven inflation might prompt rate hikes, but central banks are tamer now. Elevated crude acts as a hidden tax, squeezing spending, yet supply elasticity balances it out. No long-term growth scars from fleeting spikes, says UBS, though sustained highs could nip import-heavy economies briefly.