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Markets Since Iran Conflict

April 01, 2026

Time to Read: 2 minutes

Markets are reacting to the Middle East conflict with sharp moves across asset classes, signaling broad risk repricing and shifting safe-haven behavior. While volatility is elevated, fundamentals like earnings growth continue to support our constructive outlook.

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The conflict in the Middle East is evolving rapidly, and the market impact spans key asset classes and indices. Oil prices have appreciated roughly 40-50%, global equities are 5-13% lower and U.S. Treasury yields are about 40 basis points higher, suggesting investors are not seeking safety there. Gold — traditionally a safe haven and inflation hedge — is down 10%. However, the U.S. dollar is 2% stronger. These moves reflect a broad risk repricing and shifting safe-haven dynamics.

Even so, our outlook remains constructive. S&P 500 price-to-earnings ratios have compressed to 19.7 times with earnings growth estimates for 2026 still above 15%. High yield bonds, typically viewed as relatively risky, are down only 1%. International equities, which were outperforming before the war began, have sold off more than the U.S. and are now in a correction.

Despite reduced risk tolerance, current signals point to a temporary disruption in oil prices, near-term pressure on inflation and uneven economic activity rather than the onset of a recession. The longer the conflict persists and oil prices remain elevated, the greater the potential impact; however, historically, markets have priced out oil shocks and geopolitical events over time. We anticipate U.S. growth of roughly 2% this year, and our guidance to clients is to stay the course as volatility often creates buying opportunities for long-term investors.

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Will Markets Remain Resilient?

Global equities have risen an annualized 11% since 2020 despite repeated shocks, as resilient growth and earnings have helped markets recover from periods of volatility. While the U.S.-Iran conflict poses near-term inflation and growth risks, markets remain constructive as earnings expectations continue to improve.

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Earnings Breadth Still Improving

Rising earnings estimates continue to support equities despite geopolitical and macroeconomic uncertainty. With profit growth broadening across S&P 500 industries, resilient corporate earnings underpin our constructive outlook for the stock market.

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Global Momentum in Manufacturing

April PMIs (purchasing managers’ indices) point to a meaningful improvement in global manufacturing momentum, with the U.S., Eurozone and Japan all posting stronger-than-expected and firmly expansionary results. The breadth of the rebound suggests improving global demand, supporting our constructive outlook outlook for growth despite ongoing geopolitical tensions.

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