Markets on High Alert: If the US Invokes Military Action Against Iran
When President Trump green‑lights a direct strike on Iran, the financial world might just buckle. That’s the warning from Nigel Green, the chief executive of de Vere Group, one of the globe’s biggest independent advisory firms.
What’s Happening Behind the Scenes?
- Trump’s approval of an attack plan for Iran is confirmed, but his administration is still waiting for Tehran’s reaction.
- The stakes: a rapid surge in oil prices and a sharp sell‑off across global markets.
- Energy traders are already pricing in deeper supply disruptions.
Why the Market’s Been Stubbornly Calm, Yet Alarmingly Ready for Shock
Despite intensifying Middle Eastern tensions, markets have stayed surprisingly steady. Investors are betting on rate cuts, stable energy costs, and a tidy global outlook. Suddenly, if the US steps in militarily, that tranquility could crack.
Consequences for Investors
- Oil Prices Shoot Up – A direct US strike, especially involving key infrastructure or shipping lanes, could push crude far higher.
- Inflation & Interest Rate Reset – Higher oil would raise inflation expectations, potentially causing the anticipated rate cut wave to vanish. Equities, which are priced on a “perfect” world, would take a double hit.
- Safe‑Haven Moves – The dollar is already a stronger hedge against the yen and Swiss franc, while Treasury yields dip, indicating a tilt toward safer assets.
Speed of Reaction Matters
Green warns that the moment the US officially enters the fray, equity markets will react immediately—not on long‑term fundamentals, but on a rapid sentiment shift.
- Who gets hit first? High‑beta stocks (think tech), emerging markets and risk‑sensitive currencies are most vulnerable.
- Timing Amplifies Shock – A sudden strike outside trading hours could leave gaps wide open, liquidity thin, and losses deeper.
Why This Is a Dangersome Disconnect
Despite the headlines and diplomatic drama, investors still hold large risk assets, bet on low rates, and keep volatility subdued. That’s a dangerous mismatch. If a full‑blown war erupts, markets won’t process it linearly—they’ll flare up hard and fast.
Impact Beyond Defense & Energy
Such an event erodes confidence and forces institutions to de‑risk swiftly. In the early stages, assets across the board will tumble.
What Market Sentiment Looks Like Today
While markets have started to echo caution, de Vere predicts a dramatic shift if the US launches a military strike. Small changes in Washington’s posture could move global markets in minutes:
- First, sentiment swings.
- Second, sector repricing.
- Third, a rush for safe assets.
Recommendations for Investors
Green’s call is that this isn’t about panic, but preparation. Investors should:
- Review portfolios for heightened volatility potential.
- Maintain discipline.
- Adopt a forward‑looking asset allocation strategy.
Central banks will also keep a keen eye. If oil rises significantly, they might halt or reverse expected rate cuts, adding further pressure on equities and credit.
What We’re Watching Now
Washington hasn’t confirmed a change in its military stance yet, though reports suggest a heightened US presence in the region. Investors remain on edge, ready to interpret any signals.
Bottom line: If the US does get involved, expect a sharp, global market reaction. Being one step ahead is key—know the risks, prepare the plan, and stay vigilant.
de Vere Group is keeping a close watch on this unfolding story and will continue to share insights and guidance to clients worldwide.
