Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make.
Initial market reaction: Spike in oil prices and a drop in S&P 500 futures followed Israel’s strikes on Iran, but markets quickly retraced—futures recovered from session lows, and gold eased from its highs .
Historical pattern: The IMF notes that while geopolitical shocks typically trigger modest overall losses (~1% monthly), emerging markets often drop around 5% during military conflicts.
Encouragingly, markets tend to rebound within a month after the initial sell-off .
Sectoral impact: Energy stocks generally profit from oil price hikes, whereas energy-dependent industries can suffer.
Broader economic factors—such as consumer sentiment, earnings, and trade developments—resume control soon after the dust settles .
Expert takeaway: Deutsche Bank research highlights that such geopolitical events tend to create short, sharp shocks lasting only weeks.
Historically, taking on geopolitical risk through buying-the-dip has been a sound strategy .
Phase Market Effect
Immediate shock Oil spikes, stocks drop
Short term (weeks) Risk premium fades; markets rebound
Tactical insight Buying the dip post-shock often pays off
