It's understandable that investors are worried about how the ongoing conflict in the Middle East might affect investments. It's been just over a year since the terrorist attack on Israel, and the continued fighting and political tension are naturally causing concern. While the conflict might cause some short-term volatility in the markets, it's unlikely to have a significant long-term impact on global economic growth and markets as a whole.
In particular, there has been some investor concern about how the war could affect oil prices. An increase in oil prices could then increase the costs of other goods and lead to inflation. While this is a risk to keep an eye on, it’s unlikely to spiral out of control at this time.
Mitch Zacks of Zacks Investment Management points out that, “it’s worth remembering that oil prices (chart below) remained firmly above $100 a barrel from the beginning of 2011 through the summer of 2014, during which time the U.S. economy grew and the stock market went up by over +50%. Higher oil prices do not necessarily mean economic recession or weak markets, especially in the current environment where oil prices seem to be more range-bound in the $70 - $80 a barrel zone.”
Source: Federal Reserve Bank of St. Louis
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As markets shift, our advisors maintain a disciplined process while monitoring our clients’ accounts. If you ever have a question, we’re here to offer guidance.
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Sources:
https://zacksim.com/blog/assessing-the-market-impact-of-escalating-war-in-the-middle-east/
Fred Economic Data. October 2, 2024. https://fred.stlouisfed.org/series/DCOILBRENTEU