Market Commentary:
Recent Geopolitical Developments and Your Portfolio
Over the weekend, escalating tensions in the Middle East — including strikes on Iranian targets and the reported death of Supreme Leader Khamenei — led to higher oil prices and a sell-off in global equity markets. These developments have created short-term volatility across financial markets.
Moments like these remind us that behind every market movement are real human consequences: the loss of life, families displaced, and a deep sense of fear and uncertainty affecting people across the region. Our thoughts are with all those impacted by this conflict.
At Correia Reynolds Wealth Management, our focus during times like this is to provide clear perspective and context. While the headlines are concerning, this is volatility, not a fundamental change in the long-term drivers of growth and returns. Markets have faced similar geopolitical shocks many times before, and history shows they tend to recover relatively quickly once the immediate uncertainty passes. Your portfolio is built with exactly these kinds of events in mind.
The Surprise Factor: Why the Reaction Feels So Sharp
In normal times, markets have months to “price in” a potential war through diplomatic buildup and headlines. This time, the escalation happened suddenly. That compressed months of typical “pre-war” selling into just 48 hours, which is why the move feels especially violent. History shows that surprise shocks often lead to sharper initial drops but more rapid recoveries once the scope of the conflict becomes clear.
What History Tells Us About Conflicts and Markets
Looking at eighteen major armed conflicts and military interventions since World War II, the pattern is both consistent and reassuring. Recent RBC Wealth Management analysis shows the S&P 500 has averaged a peak-to-trough decline of just 6.0%, with the low typically reached in only 13 trading days and a full recovery to even in roughly 28 trading days.
Even in more notable recent cases, the impact was contained: the lead-up to Russia’s intervention in Ukraine produced a 7.4% drawdown, while the 12-Day War involving Israel, the U.S., and Iran in June 2025 saw only a 1.3% pullback. Across broader geopolitical and historical events, the S&P 500 has been higher twelve months later 65% of the time.
While the current events feel unsettling, these historical episodes have rarely led to permanent losses for patient investors who stay the course.
The Key Focus: The Strait of Hormuz
The main short-term risk remains energy prices. The Strait of Hormuz — the narrow waterway between Iran and Oman that connects the Persian Gulf to the Arabian Sea — is one of the world’s most critical energy chokepoints. Roughly 20% of global oil supply flows through this strategically important passage. Any disruption there can create temporary shortages and inflationary pressure. We’ve already seen oil prices move higher as tanker traffic has slowed dramatically in recent days.
However, the global supply picture has built-in buffers — spare capacity from other producers and strategic reserves in places like the U.S. and China. Encouragingly, the Trump administration announced today that the U.S. government, through the Development Finance Corporation, will offer political risk insurance for tankers at reasonable rates, with the U.S. Navy prepared to provide escorts if necessary. These steps are designed to restore confidence and keep vital energy supplies moving. Longer term, many analysts see the possibility of negotiated outcomes leading to more stable (or even lower) prices.
How Your Portfolio Is Positioned
Your investments are deliberately structured around high-quality companies that can weather geopolitical volatility while participating in powerful long-term growth trends.
Whether your portfolio is focused entirely on equities or includes fixed income and alternatives, the guiding principle is the same: own high-quality holdings with strong competitive advantages, consistent cash flows, and exposure to enduring trends such as infrastructure and technological advancement.
The latest research from major firms continues to highlight capital spending on infrastructure and technology as a primary driver of the global economy for years to come. Explosive demand for artificial intelligence is driving massive investment in data centers, semiconductors, and power infrastructure, while government initiatives and corporate reshoring are accelerating spending on utilities, transportation, and advanced manufacturing. This environment aligns precisely with how we have positioned your holdings — emphasizing quality companies that directly benefit from these durable multi-year trends rather than more speculative, high-valuation areas that face greater pressure.
For clients with a diversified mix, the combination of equities (for growth), fixed income (for stability), and alternatives (for diversification) helps smooth the ride. We also maintain a modest cash buffer — not because we’re predicting trouble, but because it’s prudent. It gives us flexibility to add to high-quality holdings on weakness without selling in panic. That buffer remains intact.
What We Are Doing
We are monitoring the situation daily, reviewing incoming research, and staying in close contact with the teams managing each component of your portfolio. Our disciplined process has not triggered any major changes. We remain fully invested but watchful.
That said, because the situation remains highly fluid, we should expect the potential for additional volatility in the days and weeks ahead. Our process is designed to navigate these uncertain environments without emotional reaction.
If the situation evolves in a way that changes our long-term outlook, we will act accordingly.
Final Thoughts
Markets will have ups and downs — that’s normal. What matters most is that your portfolio is diversified, high-quality, and built for the long term. The events in the Middle East are serious on a human level and create short-term volatility on a financial one. But they do not change the underlying trends of innovation, infrastructure investment, and economic growth that have supported markets for decades.
If this note hasn’t fully eased your mind, please call or email us directly. We’re happy to walk through your specific accounts, review the latest numbers, or simply talk through what’s on your mind.
Thank you again for the trust you place in us. It means a great deal, and we take it seriously every single day.
Warm regards,
Marc Correia CFA, CFP, FEA, Senior Portfolio Manager & Wealth Advisor Correia Reynolds Wealth Management RBC Dominion Securities
References
RBC Wealth Management – Weekly Insight (Feb 24 2022)
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