Markets on edge over US involvement in Israel-Iran conflict

Yasmine Raso

Senior Journalist, Financial Newswire

23 June 2025

The growing possibility of the United States’ military intervention in the Israel-Iran conflict would not only escalate geopolitical tensions but also induce a sharp market shock, according to commentary from global financial advisory, deVere Group.

Chief executive Nigel Green warned that while markets have remained uncharacteristically optimistic over the past few weeks, oil prices have been trading approximately nine per cent higher since the conflict commenced over one week ago – and are set to spike with US intervention.

“Markets have remained surprisingly steady in recent weeks, even as tensions in the Middle East have escalated. But if the US joins the conflict militarily, that calm will break,” Green said.

“Investors are currently positioned for rate cuts, stable energy prices and an orderly global outlook. A sudden and serious expansion of this conflict would force a violent repricing of risk across all major asset classes.

“The world economy is not in a strong position to absorb another energy shock.

“If oil spikes from here, inflation expectations will shift, interest rate cut expectations will fade, and that would create a double blow for equities already priced for perfection.”

Green noted that investors have quietly looked to buff up their portfolios with safer assets as the US dollar gained on the Japanese yen and Swiss franc and Treasury yields fell, but this strategy shift is set to “accelerate sharply” the minute the US signals it will become involved in the ongoing conflict.

“The moment the US is involved, equity markets will react immediately. This isn’t about long-term fundamentals. It’s about a rapid shift in sentiment and positioning,” he said.

“High-beta stocks, tech, emerging markets, and risk-sensitive currencies are likely to be the first casualties.

“If a US strike happens suddenly or outside of regular trading hours, investors will scramble to adjust. That’s when gaps widen, liquidity dries up, and losses deepen.”

Green also highlighted several concerns over the market’s current unpreparedness to face the probability of intense volatility and a high-risk environment, urging investors to address this “dangerous disconnect” before their portfolio is “caught off-guard”.

“This is a dangerous disconnect,” he said.

“If a broader war breaks out, there’s no reason to believe markets will process that information gradually. The initial reaction will be fast and disorderly. This kind of event drags on confidence and forces institutions to de-risk quickly. It pulls down assets indiscriminately in the early stages.

“We’re entering a zone where every headline matters. A change in posture from Washington could move global markets within minutes. This is not a call to panic. But it is a call to prepare. Geopolitical shocks can’t always be predicted, but their impact can be mitigated with the right risk management and forward-looking asset allocation.

“If oil pushes significantly higher, central banks could be forced to pause or reverse rate cuts that are currently expected. That would place additional pressure on equities and credit.”

“The first move will be sentiment-driven. The second will be repricing across sectors. And the third will be the hunt for safe assets. If the US gets involved, we expect a sharp, global reaction. Investors need to be one step ahead, not caught off guard.”