Keeping perspective amid geopolitical uncertainty
Geopolitical events can feel deeply unsettling, particularly when they dominate the headlines and unfold at speed. It’s natural to wonder what this means for your investments.
On Saturday 28 February, the United States and Israeli forces launched coordinated military strikes against Iran, with President Trump confirming that “major combat operations” were underway.
We recognise that events like this can be concerning.
What we’re seeing in markets
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.
How geopolitical events affect markets
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.
Periods of market volatility can feel uncomfortable, but history shows that remaining invested through uncertainty is often far more rewarding than trying to time the market. In fact, investors who stay focused on their long term objectives are typically better placed to benefit when markets recover.
Alan Goodman, CIO, Lloyds Wealth
How your portfolio is positioned
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.
What we’re doing now
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.
Important information
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.
Any views expressed are our in-house views at the time of publishing. This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.
Lloyds Wealth (ACD) is a trading name of Lloyds Wealth Management (ACD) Limited. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 11722973. Authorised and regulated by the Financial Conduct Authority number 834833.
