Insights Chart of the Week

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.

Enlarge

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.

Article | Chart of the Week

Not in a Bubble

As the S&P 500 approaches all-time highs, there are renewed concerns among investors about elevated valuations. However, historically strong profitability and expected earnings growth appear to support current pricing. In addition, the current S&P 500 price-to-earnings (P/E) ratio is roughly equal to the average since Covid. As a result, we do not view U.S. equities as being in bubble territory and we remain constructive on the asset class.

Article | Chart of the Week

Is the Market Rally Broadening?

Stocks, as measured by the S&P 500, are up over 13% through early August. The solid gains have been fueled by a resilient economy, steady consumer spending, optimism around artificial intelligence and better-than-expected earnings growth. Still, some investors worry the advance may be too concentrated in technology and AI-capex monetization may fall short of expectations. A closer look suggests that it is not just tech moving the market higher.

Article | Chart of the Week

Fed Friction?

Markets are navigating tensions caused by a Federal Reserve that offers less guidance and an inflation backdrop that remains sticky. Added uncertainty from the Middle East conflict and energy-price swings are further shaping sentiment, with recent moves in Treasury yields suggesting the market wants the Fed to hike. However, with yield volatility expected to linger in the near term, we see today’s elevated Treasury yields as an especially compelling opportunity in fixed income.

Article | Chart of the Week

Muni Yields Are Attractive

The war in Iran has increased volatility across fixed income markets, pushing municipal bond yields higher as investors reassess inflation risk, energy costs and the path of Federal Reserve policy. Even so, historically elevated municipal bond yields present a compelling opportunity for tax-sensitive investors.

Past performance is no guarantee of future results. This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation.

The Bank of New York Mellon, DIFC Branch (the “Authorized Firm”) is communicating these materials on behalf of The Bank of New York Mellon. The Bank of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act upon it. The Authorized Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE.

The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorized by the Prudential Regulation Authority. The Bank of New York Mellon London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited liability in the State of New York, USA. Head Office: 240 Greenwich Street, New York, NY, 10286, USA.

In the U.K. a number of the services associated with BNY Wealth’s Family Office Services– International are provided through The Bank of New York Mellon, London Branch, One Canada Square, London, E14 5AL. The London Branch is registered in England and Wales with FC No. 005522 and BR000818.

Investment management services are administered by BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY Trust Company (Cayman) Ltd.

This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided within this document is for use by professional investors.

This material is a financial promotion in the U.K. and EMEA. This material, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such.

BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland.

Trademarks and logos belong to their respective owners.

BNY Wealth conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation. BNY is the corporate name of The Bank of New York Mellon Corporation and may be used to reference the corporation as a whole and/or its various subsidiaries generally.

WI-908765-2026-03-30

Let’s start a conversation.

Contact Us