Keeping perspective amid geopolitical uncertainty

Financial markets are responding to a fast‑moving situation, and volatility has picked up as investors try to assess the potential implications.

Oil prices have risen, reflecting the fact that around 20% of global oil supply passes through the Strait of Hormuz. Gold has moved higher, as investors gravitate towards assets that have historically helped provide balance during periods of uncertainty.

At this stage, markets are primarily responding to the risk of disruption rather than any confirmed impact on energy supply.

While eye‑catching, these moves remain within normal market dynamics.

As we’ve explored previously, geopolitical events tend to influence markets in two main ways.

The first is economic disruption. Events such as conflict, sanctions or trade restrictions can affect supply chains, energy prices or access to key resources, with knock‑on effects for company profits and economic growth.

The second is market sentiment. Even when the direct economic impact is limited, uncertainty can weigh on confidence. When many investors react at the same time, by reducing risk or seeking perceived safe havens, markets can move sharply in the short term.

Both forces can drive volatility. Importantly, however, volatility is not the same as permanent loss, particularly when markets are reacting to uncertainty rather than established economic outcomes.

While geopolitical uncertainty has become more frequent in recent years, history suggests that financial markets have generally been resilient over the long term.

Major events, from financial crises to political shocks, are often visible in market charts at the time they occur. But in most cases, their impact fades as markets refocus on fundamentals such as earnings growth, innovation and economic activity.

Historically, even periods of elevated geopolitical risk have tended to influence markets through sentiment and energy prices, rather than altering long‑term growth trajectories on their own.

This is why reacting to headlines can be so damaging for long‑term investors. Short‑term market moves are driven as much by emotion as by economics, and decisions made in moments of stress are rarely the ones that serve long‑term goals.

Diversification across asset classes, regions and investment styles helps reduce reliance on any single outcome, including scenarios where geopolitical risk temporarily lifts energy prices or investor caution. Assets behave differently in different environments, and holding a mix, including exposure to assets, can help smooth the journey when uncertainty rises.

Our investment philosophy is focused on long‑term goals rather than short‑term headlines.

We continue to monitor developments closely.

Our investment approach has not changed. We remain focused on identifying anything that could have a lasting impact on your portfolio and adapting where appropriate.

If our assessment changes, we will keep you informed. In the meantime, staying invested, diversified and focused on your long‑term objectives remains the most reliable way to navigate periods of heightened uncertainty.

This article is for information purposes only. It is not intended as investment advice.

The value of investments and the income from them can fall as well as rise and are not guaranteed, and so you might not get back your initial investment.

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