The U.S. has launched what President Trump called “major combat operations” in Iran, with strikes targeting multiple government ministries in Tehran. The news broke on Saturday, February 28, while markets were closed — meaning Monday morning will be the first real test of investor sentiment.
This is not a typical geopolitical headline. Multiple analysts and fund managers are calling it potentially the most significant market-moving event since the 2025 tariff escalation — and some believe the impact could be far greater.
Here’s what you need to know and how to position your portfolio.
Why This Is Different From Previous Geopolitical Shocks
Over the past two years, markets have proven remarkably resilient to geopolitical disruptions. Trump’s 15% universal tariff hike and the capture of Venezuelan President Nicolás Maduro both caused brief jitters before investors moved on.
Iran presents a fundamentally different risk profile.
Speaking to CNBC, Florian Weidinger, CIO at Santa Lucia Asset Management, drew a clear distinction: the Venezuela situation was largely contained to heavy crude markets, whereas Iran’s significance extends far beyond its own oil production.
The core issue is geography. Venezuela was a production story. Iran is a chokepoint story.
Venezuela’s output of roughly 800,000 barrels per day — down sharply from its 1990s peak of 3.5 million bpd — is significant but manageable for global markets. Iran, however, sits on the Strait of Hormuz, arguably the most strategically important oil transit route in the world.
According to market intelligence firm Kpler, approximately 13 million barrels per day of crude transited the strait in 2025 — accounting for roughly 31% of all seaborne crude oil flows globally. Even a partial disruption to this chokepoint would send shockwaves through every major economy.
What Markets Are Expected to Do on Monday
The consensus among strategists points to a turbulent open across asset classes:
Equities
Natixis chief economist for Asia-Pacific Alicia García-Herrero anticipates global equities could open 1% to 2% lower, with the potential for steeper declines depending on weekend developments. Sectors with high sensitivity to energy costs and economic cycles — including airlines, shipping, travel, and consumer discretionary — face the greatest downside risk.
Global X ETFs’ Billy Leung echoed this view in a client note, highlighting that Asian markets may be particularly exposed due to the region’s heavy reliance on stable Middle Eastern energy supplies.
Oil
Energy markets are where the real action will be. Most analysts project crude prices to surge 5% to 10% at the open. The key variable is the Strait of Hormuz — if shipping continues uninterrupted, the price spike may prove short-lived. But any Iranian retaliation targeting strait traffic could push prices significantly higher.
Safe Havens
A textbook flight-to-safety response is widely expected:
- Gold — the traditional crisis hedge — is likely to see strong buying pressure
- U.S. Treasury yields could decline 5 to 10 basis points as investors rotate into bonds
- U.S. Dollar and Japanese Yen are expected to strengthen as safe-haven currencies attract flows
The Historical Parallel
The closest precedent is June 2025, when Israeli strikes on Iranian nuclear facilities triggered a sharp equity selloff at the open — only for markets to recover once it became evident that Hormuz strait traffic remained unaffected.
Kenneth Goh, director of private wealth management at UOB Kay Hian in Singapore, told CNBC that this is likely the playbook investors will reach for on Monday.
The Two Scenarios: Short Campaign vs. Prolonged Conflict
The ultimate market impact hinges on one critical question: how long does this last?
Scenario 1: Short, Contained Campaign
If the operation proves to be a focused, limited-scope strike, the market response could follow the June 2025 template: an initial sharp selloff that reverses within days as the threat of broader escalation fades.
Quantum Strategy’s David Roche, speaking to CNBC, suggested that a short conflict would likely produce only a brief risk-off episode and a temporary oil price spike.
Scenario 2: Prolonged “Regime Change” Conflict
However, if the campaign extends into what Roche described as a multi-week regime change operation, the market consequences could be severe. In this scenario, investors would need to price in:
- A wider regional conflict drawing in additional actors
- Sustained disruption to global oil supply chains
- The risk of a Strait of Hormuz closure or partial blockade
- Renewed inflationary pressure on an already fragile global economy
Sectors to Watch
Likely Winners
- Energy stocks (ExxonMobil, Chevron, ConocoPhillips) — higher crude prices translate directly into stronger revenue and margins
- Defense contractors (Lockheed Martin, Raytheon, Northrop Grumman) — active military operations historically drive increased defense budget allocations
- Gold miners (Newmont, Barrick Gold) — a surge in gold prices flows directly to mining company bottom lines
Likely Losers
- Airlines (Delta, United, American) — jet fuel is their largest variable cost, and it moves with crude
- Cruise lines (Carnival, Royal Caribbean) — face a double hit from travel disruption and surging fuel expenses
- Consumer discretionary — rising energy costs erode household spending power
- Asian markets broadly — the region’s heavy dependence on Middle Eastern crude imports makes it especially vulnerable
How to Protect Your Portfolio
1. Don’t Panic Sell
Historical data consistently shows that geopolitical selloffs — even sharp ones — tend to be temporary. The S&P 500 has recovered from every major geopolitical shock in the post-war era, typically within weeks to months.
2. Review Your Energy Exposure
Portfolios that are underweight energy may find the sector acts as a natural hedge in this environment. When oil prices spike, energy equities tend to rally, helping offset losses elsewhere.
3. Consider Safe-Haven Assets
- Gold ETFs (GLD, IAU) — provide direct, liquid exposure to gold price movements
- Short-term Treasury ETFs (SHV, BIL) — offer capital preservation with minimal duration risk
- Defensive sectors (utilities, healthcare, consumer staples) — historically outperform during periods of elevated market stress
4. Wait for Iran’s Response
Natixis’ García-Herrero cautioned investors against making aggressive bets before the situation clarifies. The initial market reaction is less important than what follows — Iran’s response, particularly any moves to disrupt Strait of Hormuz traffic, will be the decisive factor in determining whether this remains a short-term event or evolves into a prolonged crisis.
5. Keep Cash Ready
Periods of heightened volatility often create buying opportunities. If Monday’s selloff overshoots fundamentals, high-quality stocks may trade at attractive discounts. Maintaining a cash reserve allows you to act strategically rather than reactively.
The Bottom Line
The U.S. military operation in Iran marks the most significant geopolitical escalation for financial markets in recent years. The near-term reaction will almost certainly be risk-off — with equities falling, oil surging, and safe havens rallying — but the lasting impact depends entirely on the conflict’s duration and scope.
The most prudent approach: stay informed, maintain diversification, and resist the urge to make emotional decisions before the full picture emerges. Monday’s open will be volatile, but the real story will unfold over the days and weeks that follow.
Sources: This analysis incorporates reporting and analyst commentary from CNBC, market data from Kpler, and research notes from Natixis, UOB Kay Hian, Global X ETFs, and Quantum Strategy. Portfolio strategy recommendations reflect Market Briefing’s independent analysis.
Market Briefing provides daily analysis of stock market trends and investment strategies. This article is for informational purposes only and does not constitute investment advice. Always consult with a qualified financial advisor before making investment decisions.
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