For investors watching the markets over the past year, geopolitics have been front and center.
In April 2025, President Trump announced a sweeping set of tariffs that set off a redefinition of global trade relations. In February 2026, the US and Israel launched the war in Iran, now in its sixth month. In Eastern Europe, the war in Ukraine rages into its fifth year, while Canada may move to become the European Union’s first “associate member.”
But that apparent level of risk doesn’t always portend ill for the stock market, UBS Wealth Management chief investment officer Mark Haefele argued in a note to clients on Friday.
“The challenge for investors is that they must make two forecasts at once,” Haefele said. “First, whether a geopolitical event will prove economically significant, and second, whether the consequences are already reflected in asset prices.”
“History suggests that both forecasts are harder to make than they might seem,” Haefele wrote.
The war in Iran, especially, has proven far more complicated and long-lasting than expected. Initially pitched by the White House as a two-week excursion, the conflict is now into its seventh month and has spent that time roiling the energy market.
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While oil prices have come slightly off their wartime highs set early in the conflict, benchmark Brent (BZ=F) and WTI (CL=F) contracts have continued to hold at or above $100 as the Strait of Hormuz — the world’s most critical chokepoint for global energy flows — remains unsafe for shipping. In recent days, Houthi activity along the Red Sea and attacks on critical Saudi infrastructure have opened up a new front in the war.
The complexity of the conflict and the number of potential red lines for the White House that have been crossed — $100 oil, the 10-year Treasury yield above 5% — led strategists at JPMorgan to tell clients they couldn’t forecast a clear path forward.
“For the first time since the start of the Iran conflict, we don’t have a baseline view,” commodities strategists at JPMorgan, led by Natasha Kaneva, wrote to clients on Thursday. “We simply don’t know how to model the endgame.”
Even so, the stock market remains just slightly off all-time highs as equities have largely shrugged off the war, with far more focus on earnings growth and the AI boom.
That resilience matches the historical record. When the market does experience a geopolitical drawdown, Haefele said, they tend to be short-lived, measuring at a median of only 16 days.