Despite rising geopolitical tensions and a sharp increase in oil prices, equity markets, particularly in the US, have remained relatively calm.
01 April 2026
Since air strikes against Iran began at the end of February, market commentary has breathlessly talked about ‘market volatility’. But volatility has not been a universal feature of the market response to this war. While it is true that oil has jumped, with Brent crude futures now at USD 113 and US average gasoline prices now at USD 3.97 as at 30 March*, the equity markets have been far calmer. Specifically, US large cap stocks in the form of the S&P 500 which make up well over 60% of the MSCI World All Country index have fallen just -7.1% from 27 February to the 30 March, barely correction territory.
Some have described this as complacency, or even as an unfair lack of punishment for a war which America helped to start. But there are several drivers behind this relative resilience which are worth considering. The first is the prospect of continued progress in AI, which has been supported by America’s army of retail investors who remain excited at the idea of this potentially world-challenging technology. Wall Street doesn’t disagree, with the consensus estimate for earnings growth in the S&P 500 Tech sector for 2026 expected to be +39% over the previous year*.
While US energy stocks are inevitably expected to cash in from oil supply constraints, the broader S&P 500, which includes plenty of potential victims of an energy shock including consumer and transportation stocks, is still predicted to see earnings growth of over 16% in 2026*. These estimates have in fact risen since the war began which, combined with the fact that the S&P 500 Index is actually down since then, offers potentially something of an opportunity for those who see resilience rather than complacency in recent stock market price action.
History suggests wars do not always derail US equities
The other supporting factor is historical, namely that wars just haven’t consistently and exclusively induced stock market crashes or recessions in the US. Perhaps this reflects America’s privileged geographical position of being able to get involved and then pull out with little consequence to the domestic economy. It is true that World War II contributed to delaying the S&P 500’s recovery from the 1929 crash until the early 1950s. But Vietnam War, Gulf War I, Afghanistan War and Gulf War II could not be said to have profoundly damaged the stock market or economy in themselves. The innovation impulse and the natural economic growth accruing from America’s huge internal market are proving tough to thwart, even as much of the world looks on in dismay at this deepening crisis.
Oil never understands – S&P 500 hasn’t cratered even in the face of a significant war-driven oil spike:
From 26 March 2021 to 30 March 2026
Source: Bloomberg, as at 30 March 2026. Past performance is not an indicator of future performance and current or future trends. LHS = left hand scale; RHS = right hand scale.
Julian Howard is Chief Multi-Asset Investment Strategist at GAM Investments. This blog represents the views of GAM’s Multi-Asset team.
*Source: Bloomberg, as at 30 March 2026.