International Conflict and Markets

Staying Focused on the Long Term

Friday, March 6, 2026

Joint airstrikes targeting Iran’s high-value military installations are currently underway as part of a coordinated effort to disrupt Iran’s nuclear development program and weaken its military capabilities. The conflict intensified significantly following the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei. In response, Iran launched a series of missile attacks aimed at Israel as well as several Gulf nations, including Qatar, the United Arab Emirates, Bahrain, and Saudi Arabia.

The impact of the conflict has quickly rippled through global energy markets. Oil and natural gas prices surged as tanker traffic through the Strait of Hormuz — a critical passage through which roughly 20% of the world’s oil supply flows — came to a halt. While energy markets are sensitive to disruptions in this region, a sustained and prolonged spike in prices would likely require evidence that the disruption will persist. At this stage, that is not our base expectation.

Although the developments are serious and the geopolitical outlook remains uncertain, history provides useful perspective for investors. Financial markets have repeatedly shown an ability to recover relatively quickly after geopolitical shocks once conditions stabilize. In many cases, markets regain lost ground within days or weeks, provided the broader U.S. economy remains on stable footing and does not fall into recession. While geopolitical events often increase short-term volatility — as we are seeing now — they rarely alter longer-term market trends unless the economic damage becomes deep and prolonged.

...these conditions suggest that periods of market weakness driven by geopolitical uncertainty may ultimately present opportunities for long-term investors.

Looking ahead, our outlook for equities in 2026 remains generally constructive. The U.S. economy continues to benefit from fiscal stimulus tied to the One Big Beautiful Bill Act as well as significant investment in artificial intelligence and emerging technologies. Corporate earnings growth, particularly within the technology sector, remains strong. S&P 500 earnings per share grew approximately 14% in the fourth quarter, providing an important foundation for stock prices.

Monetary policy may also become more supportive later in the year. The Federal Reserve is still expected to begin lowering interest rates during the second half of the year as inflation pressures gradually ease. While Treasury yields initially rose following news of the strikes, overall interest rate levels remain manageable for the broader economy. In fact, mortgage rates dipped below 6% in February for the first time since 2022, offering support to the housing market — an important driver of economic activity.

Taken together, these conditions suggest that periods of market weakness driven by geopolitical uncertainty may ultimately present opportunities for long-term investors.

For investors, the message remains consistent: stay patient and remain diversified. Periods of geopolitical tension can understandably create anxiety, but the long-term history of financial markets shows that discipline and perspective are often rewarded. Short-term uncertainty should not overshadow long-term opportunities.

In times of uncertainty, we are reminded that while markets rise and fall, our hope is grounded in something far more enduring.

Finally, we extend our deepest gratitude to the service men and women who are currently serving in harm’s way. We pray for their safety and for a peaceful resolution that leaves the world safer on the other side of this conflict.

In times of uncertainty, we are reminded that while markets rise and fall, our hope is grounded in something far more enduring. Scripture reminds us that “God is our refuge and strength, a very present help in trouble” (Psalm 46:1). So in that spirit of faith, patience, and discipline, we work!

As always, please reach out to us if you have any questions.

Jim Pannell,

Managing Principal

(The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.)