Periods of geopolitical tension often dominate the headlines, and the recent military action involving the US, Israel and Iran is no exception. Such events naturally heighten uncertainty. As ever, markets digest new information rapidly. Prices reflect the consensus view of millions of participants, each interpreting evolving events in real time. Where the situation goes next is unknowable. Markets will move as fresh information arrives – a random process – and investors should be cautious in drawing firm conclusions from the present moment.
Despite the concerning news flow, global markets remain positive year-to-date in GBP terms. Value, small-cap, emerging markets and commercial property have all delivered additional gains, offering helpful diversification. High-quality bonds have also held up well. This is what a diversified portfolio is designed to do: provide exposure to different sources of return so that no single event determines the outcome.
Figure 1: Market returns in 2026
Data source: see endnote. Returns in GBP to 04/03/2026.
Returns over the past few days – since the latest escalation – are, as expected, noisier. A handful of trading days during a geopolitical shock rarely provide meaningful insight. Markets are simply repricing risk as new information becomes available, and they will continue to do so.
Events such as these can tempt investors to question whether they should do something. The short answer is that they should not. Periods of market stress – whether caused by conflicts, pandemics, political upheaval or economic surprises – are a feature of investing, not a bug. They feel uncomfortable, but they are expected.
The chart below demonstrating that “every year the market falls” is a powerful reminder. Even in strong years, intra-year declines are entirely routine. Falls of 10% or more happen with regularity. Investors who remain disciplined, diversified and patient have historically been rewarded with returns well above inflation over time. Volatility is not an anomaly; it is the mechanism by which long-term returns are earned.
Figure 2: Every year the market fall
Data source: Albion World Stock Market Index. Returns in GBP from 01/01/2007 to 03/03/2026.
We do not know how the conflict in the Middle East will develop, and the day‑to‑day movement of markets is no clearer now than at any other time – it is essentially a coin toss. What we do know is that a well‑structured, globally diversified portfolio is designed to cope with periods of uncertainty. Markets absorb new information quickly, meaning today’s prices already reflect the best collective view of the future. Trusting that process – rather than reacting to short‑term noise – has served long‑term investors well for decades.
Stay diversified, stay disciplined, and remain focused on long-term goals. Keep calm and carry on!
Data source endnote:
Important notes
This is a purely educational document to discuss some general investment related issues. It does not in any way constitute investment advice or arranging investments. It is for information purposes only; any information contained within them is the opinion of the authors, which can change without notice. Past financial performance is no guarantee of future results.
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Risk Warnings
This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Reference to specific products is made only to help make educational points. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Past performance is not indicative of future results and no representation is made that the stated results will be replicated.
Data series used: global equities – Vanguard Global Stock Index $ Acc in GBP; global bonds – Dimensional Global Short Dated Bd Acc in GBP