War is Loud. Markets, Eventually, are Quiet.
When US and Israeli forces launched joint strikes on Iran at the end of February 2026, three commodity markets told the story instantly. Brent crude surged toward US$119 per barrel at its peak. Gold leapt to US$5,418 per ounce. Silver spiked as high as US$121 before reversing sharply. For investors in Sydney and New York, the initial shock was visceral yet eight decades of geopolitical history offered a steadying counterpoint: markets flinch, but they rarely fall for long.
In 2026, geopolitical risk has become a near-permanent feature of the investment landscape. The Middle East conflict centered on the Strait of Hormuz, through which roughly 20% of global oil and LNG flows daily has forced Australian and US investors to simultaneously reassess equities, energy markets, and precious metals. Understanding how each behaves under wartime conditions has never been more pressing.
Equity Markets: The Initial Shock
History provides a steady anchor. Across more than eighty major geopolitical events from Germany’s invasion of France in 1940 to the US removal of Maduro in Venezuela in January 2026 the S&P 500 fell an average of just 0.9% in the first month following a shock. Risk premiums expand, sentiment deteriorates, and institutional investors reduce exposure almost reflexively. The current Iran conflict produced a comparable initial reaction, with markets described in early March 2026 as cautious but not disorderly watching, not panicking.
The longer-horizon data is more reassuring. Within three months, markets have historically returned to positive territory on average. By six months the typical gain reaches 3.4%; at twelve months the median return is 7.4%. Alliance Bernstein analysts note that on average the S&P 500 is up 7% one year after major conflict outbreaks. Sixty-five percent of all events in the dataset produced higher equity markets within a year. For long-term investors on both sides of the Pacific, that figures is worth holding onto when headlines turn dark.
The Range of Equity Market Pullbacks
Averages can flatter. The range of outcomes is wide, and 2026 is testing that range in real time. The 1973 Yom Kippur War where conflict combined with an oil embargo produced a 43% decline in US equities over twelve months and is now the historical template most frequently cited by analysts assessing the current Iran situation. Daily tanker transits through the Strait of Hormuz briefly fell from 24 to just four in early March 2026, sending Brent crude up more than 22% in a single week. By contrast, the Iraq War in 2003 delivered 26% equity upside within a year; Brexit produced nearly 20%. The key differentiator has always been whether conflict generates a secondary economic shock and crude oil’s trajectory will likely determine which historical precedent 2026 most closely follows.
For Asian economies most directly exposed to Hormuz disruption the GDP consequences are immediate. An oil move from US$70 to US$85 per barrel alone would cost Singapore approximately 1.7 percentage points of real growth, Taiwan around 1.2 percentage points, and material fractions across Korea, Thailand, the Philippines, China, and India.
