Global Macro Research
Macro BytesHow are investors responding to the Iran conflict? with Victoria Scholar from interactive investor
A longer-than-expected Middle East conflict has sent oil prices soaring — but the real story is how this shock is rippling through markets, overturning long held assumptions about risk, diversification and safe havens.
Authors
Paul Diggle
Chief Economist
Luke Bartholomew
Deputy Chief Economist
Duration: 23 Mins
Date: Apr 02, 2026
The Iran war is now in its fifth week, longer than many in the market had expected. It continues to be a source of significant asset price volatility.
In the latest episode, Paul and Luke are joined by Victoria Scholar, Head of Investment at interactive investor (ii), to consider the market and investor reaction to the conflict.
They discuss the significance of oil prices as both barometer and transmission mechanism of the conflict, the performance of emerging versus developed markets, investor interest in gold and where diversification can be found in a geopolitical crisis.
They also consider whether retail investors can be better contrarians at market turning points.
Some highlights:
- The role(s) of oil. It has become a barometer of geopolitical risk, the main channel through which the shock hits inflation and growth, and a potential pressure point that could eventually force political de escalation. Watching oil prices has become shorthand for watching the entire crisis unfold.
- Time matters more than headlines. Markets can absorb bad news for a while, but physical shortages eventually bite. The longer key supply routes stay closed, the greater the risk of sharp, nonlinear moves in prices — and the harder it becomes for markets to stay calm.
- Old assumptions about ‘safe havens’ are being challenged. Bonds and gold, traditionally relied on to cushion portfolios during turmoil, have both disappointed. Rising inflation fears have pushed bond prices down, while gold has behaved more like a volatile risk asset than a steady refuge.
- Interest rate expectations have been turned on their head. Before the conflict, investors were looking for rate cuts. Now, some markets are flirting with the idea of hikes instead — a dramatic reversal that has sent shockwaves through government bond markets.
- Retail investors are often contrarians. Rather than panicking, many retail investors have been selectively buying the dip — snapping up beaten down banks, airlines and even precious metals, betting that today’s turmoil may create tomorrow’s opportunities.
Listen to the full discussion on the latest episode of Macro Bytes:
