Like many of you, we at Friends Fiduciary have been dismayed at the news that another war has begun, in a world already suffering from much violence and upheaval. We hold in the Light those who have been killed, their families and loved ones, and everyone who is affected by this conflict and who must now live in fear of death or displacement from war.
Geopolitical conflicts involving major oil producing nations often create significant short-term volatility across commodities, currencies, and equities. Markets are already reacting; crude oil prices have risen sharply—jumping 17% since Friday—while the U.S. dollar has strengthened, creating pressure on economies dependent on imported oil priced in dollars. Equity markets have also responded unevenly. The MSCI ACWI ex US Index has declined more than 5% over the past several days, while domestic equities, as measured by the S&P 500, have experienced a more moderate pullback of less than 1%.
For investors, the key variables going forward include the duration of the conflict, potential damage to oil infrastructure, and whether additional nations become involved. Each of these factors may influence oil supply, global trade flows, and trajectories of economic growth. While the full economic impact remains uncertain just five days into the conflict, U.S. corporations have not yet shown discernible fundamental deterioration. At the same time, market indicators such as the VIX Index initially spiked—signaling expectations of heightened volatility—before retreating back to pre-conflict levels, suggesting that investors may be anticipating a shorter-lived disruption.
From a sector exposure standpoint, elevated crude oil prices tend to benefit energy producers while creating cost pressures for transportation, manufacturing, and consumer dependent industries. Throughout periods of geopolitical tension and heightened volatility, we continue to emphasize the importance of diversified portfolios, disciplined asset allocation, and a focus on long-term fundamentals rather than short-term market reactions.
Financial markets have demonstrated resilience through previous cycles of geopolitical stress, and we remain committed to maintaining long-term positioning aligned with our investment philosophy and risk management framework.
A world free from violence and war is unquestionably a world with a more prosperous, sustainable economy for all. Our work toward that vision continues.