War in Iran - What it means for you

US military action in the Middle East increasing market volatilty

The outbreak of hostilities between the United States, Israel, and Iran has sent shockwaves through global markets. As fiduciary advisers, we want to provide perspective on what we're seeing and how investors can navigate this period of heightened uncertainty.

Immediate Market Reactions

The conflict's impact has been swift and predictable in certain sectors. Energy stocks surged as Iran closed the Strait of Hormuz, disrupting roughly 20% of global oil supplies. Major integrated oil companies and domestic producers have seen double-digit gains as Brent crude jumped above $80 per barrel. Natural gas exporters have similarly benefited as Europe scrambles for alternative LNG sources.

Globally, the impacts are not evenly distributed. Countries like Germany and France are particularly sensitive to rising energy costs and slower industrial output. When energy becomes more expensive, it ripples through their entire economy—from manufacturing to consumer spending. In asia, economies like South Korea and Japan, which rely heavily on global trade and stable energy costs, are feeling pressure. Higher oil prices can squeeze margins for manufacturers, and uncertainty can slow economic activity and their stock markets have reflected that strain. Conversely, Latin America and the United States, not nearly as much. Defense contractors have also attracted significant investor attention. Aerospace and defense names are rallying as governments reassess military readiness and accelerate procurement programs. While these sectors may offer near-term opportunities, investors should remember that geopolitical premiums can evaporate quickly when conflicts de-escalate.

Regional Economic Pressures

Asian economies are feeling acute pressure from the supply disruption. Japan and South Korea, heavily dependent on Middle Eastern oil imports, face particular vulnerability. Both nations are now competing aggressively for alternative supplies while their manufacturing sectors absorb higher input costs. These energy-dependent economies could see growth forecasts revised downward if the conflict persists.

Western Europe confronts a similar challenge. Germany and France, already navigating weak industrial output, now face another energy shock reminiscent of recent European crises. Chemical manufacturers and heavy industry are imposing surcharges up to 30% to offset rising costs. The European Central Bank has warned of potential stagflation—a toxic combination of stagnant growth and rising inflation—that could push major economies into recession by year-end.

Finding Opportunity in Uncertainty

Despite the doom and gloom dominating headlines, disciplined investors can identify pockets of value. The utility sector, often overlooked during bull markets, offers defensive characteristics worth considering. Regulated utilities provide essential services with relatively predictable cash flows, making them attractive when volatility spikes.

Basic chemicals present another interesting opportunity. While energy-intensive chemical producers face margin pressure, companies with diversified feedstock sources or long-term supply contracts may weather this storm better than the broader market anticipates. Careful security selection matters here—not all chemical companies are created equal in this environment.

The Long View

It's natural to feel anxious when geopolitical events dominate the news cycle. However, investors would do well to remember that markets have navigated wars, crises, and disruptions throughout history. The Gulf War, Iraq invasion, and countless other conflicts created temporary volatility but didn't derail long-term wealth creation for disciplined investors.

This doesn't mean ignoring risks or maintaining a static portfolio. It means recognizing that panic selling during crises has historically been a wealth-destroying strategy. Instead, work with your adviser to stress-test your portfolio, rebalance if appropriate, and potentially identify opportunities that others are overlooking in their rush to safety.

Markets will eventually find equilibrium. Energy supplies will adjust. Diplomatic solutions—however imperfect—will emerge. Your job as a long-term investor isn't to predict when these things happen, but to maintain perspective and discipline while they unfold.

At OnePoint Capital Management, we're monitoring these developments closely and stand ready to help you navigate whatever comes next. If you have questions about your specific situation or want to review your portfolio's positioning, please reach out.

The views expressed are those of OnePoint Capital Management and should not be construed as investment advice. Past performance does not guarantee future results.