Markets have largely looked through the Iran–US conflict, but the after effects may linger via energy prices, inflation and disrupted supply chains.
Here’s how we’re thinking about portfolios from here.
What happened: On 28 February, the US attacked Iran. What started as a rapid strike has shifted into a longer standoff centred on access to the Arabian Gulf.
What we think matters: the headline risk is fading, but the economic plumbing is not.
- Big-picture themes are likely to resume: tariffs, reduced migration, a smaller role for government, and a weaker US dollar.
- Energy is the swing factor: if energy stays higher, inflation can persist and rates may remain higher for longer.
- Trade is already feeling it: global merchandise trade growth is expected to slow from ~4.6%–4.7% (2025) to ~1.5%–2.5% (2026).
- Supply chains are fraying again: over 70% of global companies report supply-related issues; trade finance is tightening and payment cycles are lengthening (paid <30 days: 10% → 7%; waiting >70 days: 15% → 24%).
- Offsetting support: the AI capex cycle is a huge driver for the US economy. Big spending chips, data centres and large language models (LLM’s) are powering growth and adding to inflation.
Portfolio implications (Australia):
- Strategic autonomy is back in fashion: expect the smart money to focus on energy security, supply chains and defence capability. The Defence Integrated Investment Program announced in April is a sign of what’s to come from government.
- Higher energy can mean higher costs and higher interest rates: it’s not good for borrowers, but it can improve incomes for savers and retirees.
- Our Strategic and Resource advantages are more valuable: Being a secure supplier of copper, gold, rare earths, uranium, lithium and many more has greater advantage than ever.
- Where opportunity may be found: defence and dual-use technology, critical minerals and processing, infrastructure, and selected energy transition exposures. It may also be found in ‘out of favour’ investments with low valuations.
- Don’t trade the noise: Avoid out thinking Donald Trump. Stay anchored to your needs and your objectives.
It doesn’t feel like a one‑off shock—it looks like another chapter in a world that’s becoming pricier, more fragmented and more security‑focused.
That creates risk, it also creates opportunity.
Noel,
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“When the facts change, I change my mind.” — John Maynard Keynes
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