Middle East Tensions: What It Means for Markets

Brew

| Jun 2025

RECENT MIDDLE EAST TENSIONS: WHAT INVESTORS SHOULD KNOW

The recent escalation in the Middle East—marked by Israeli strikes on Iran and subsequent U.S. military action—has introduced near-term volatility and renewed geopolitical uncertainty. While these developments are concerning, it’s important to note that regional conflicts in the Middle East are not uncommon. History reminds us that maintaining a long-term investment perspective is crucial during periods of geopolitical tension.

Impact on Oil and Energy Markets

Naturally, these events have raised concerns about potential disruptions to global oil supplies. Iran accounts for roughly 4% of global crude oil production and sits near the Strait of Hormuz, a vital passageway for the world’s oil trade. Any disruption in this area can influence prices. That said, several counterbalancing forces are at play: OPEC+ has recently signaled its willingness to increase output, and U.S. oil production has reached record highs (see chart below). These supply-side dynamics may help moderate upward pressure on oil prices, even if tensions escalate.

What About the Stock Market?

While it may seem counterintuitive, history shows that risk assets—including equities—often perform well in the wake of U.S. military engagement. The chart below illustrates the average return of the S&P 500 in the days following U.S. involvement in various conflicts. Notably, the one outlier—Afghanistan in 2001—coincided with the aftermath of the Dot-Com bubble, rather than being driven solely by geopolitical factors.

Markets tend to digest geopolitical shocks relatively quickly, shifting focus back to economic fundamentals. As the data below demonstrates, even significant global events have historically not derailed long-term market performance.

Source: Strategas

Source: Strategas

We will continue to closely monitor developments in the Middle East and assess their potential impact on markets. As always, we remain committed to making thoughtful, research-driven decisions on behalf of our clients and will adjust portfolios as needed in response to changing conditions. Please don’t hesitate to reach out to your advisor or relationship manager if we can be of assistance.

MARKET BACKDROP

ASSET CLASS SUMMARY
As of 06/20/2025

Asset Class	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
U.S. Stock	+0.53%	+5.63%	+1.74%	+10.90%	+18.70%	+15.11%	+12.27%
Global Ex U.S.	+0.73%	+5.42%	+14.86%	+14.44%	+13.56%	+9.83%	+6.15%
U.S. Bond	+1.08%	+0.24%	+2.95%	+4.32%	+2.63%	-0.89%	+1.62%
Global Bond	+1.50%	+3.18%	+5.96%	+6.94%	+2.64%	-1.37%	+0.98%
U.S. Real Estate	-0.02%	-0.24%	+2.95%	+12.40%	+5.96%	+6.53%	+6.10%

SECTOR SUMMARY
As of 06/20/2025

Cyclical	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
Consumer Cyclical	-1.77%	+8.33%	-7.09%	+16.13%	+17.76%	+11.14%	+11.90%
Financials	-1.88%	+1.84%	+4.68%	+23.43%	+19.91%	+18.30%	+11.75%
Materials	-0.56%	+0.44%	+3.52%	-1.54%	+7.16%	+11.23%	+7.78%
Real Estate¹	-0.11%	+0.38%	+3.52%	+12.89%	+6.01%	+7.03%	+7.19%

Sensitive	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
Comm. Services	+2.77%	+8.90%	+4.27%	+17.65%	+25.77%	+15.14%	+11.22%
Energy	+6.75%	-3.50%	+5.07%	+2.13%	+10.66%	+22.82%	+5.80%
Industrials	-0.92%	+7.44%	+8.47%	+17.43%	+20.56%	+17.46%	+11.67%
Technology	+3.18%	13.37%	+2.24%	+7.54%	+30.35%	+22.29%	+22.16%

Defensive	1 Month	3 Month	YTD	1 Year	3 Year	5 Year	10 Year
Consumer Defensive	-1.97%	+3.61%	+5.50%	+10.62%	+10.60%	+10.85%	+8.86%
Health Care	-1.58%	-9.46%	-3.17%	-7.90%	+5.18%	+7.44%	+7.63%
Utilities	-2.47%	+2.62%	+7.49%	19.34%	+11.11%	+10.61%	+10.11%

Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Consumer Cyclical (S&P 500 Consumer Discretionary (Sector) Total Return), Financials (S&P 500 Financials (Sector) Total Return), Materials (S&P 500 Materials (Sector) Total Return), Real Estate (S&P 500 Real Estate (Sector) Total Return¹), Comm. Services (S&P 500 Communication Services (Sector) Total Return), Energy (S&P 500 Energy (Sector) Total Return), Industrials (S&P 500 Industrials (Sector) Total Return), Technology (S&P 500 Information Technology (Sector) Total Return), Consumer Defensive (S&P 500 Consumer Staples (Sector) Total Return), Health Care (S&P 500 Health Care (Sector) Total Return), Utilities (S&P 500 Utilities (Sector) Total Return).

1) The index Launch Date is Sep 19, 2016. All information for an index prior to its Launch Date is hypothetical back-tested, not actual performance, based on the index methodology in effect on the Launch Date. Back-tested performance reflects application of an index methodology and selection of index constituents with the benefit of hindsight and knowledge of factors that may have positively affected its performance, cannot account for all financial risk that may affect results and may be considered to reflect survivor/look ahead bias. Actual returns may differ significantly from, and be lower than, back-tested returns. Past performance is not an indication or guarantee of future results. This back-tested data may have been created using a “Backward Data Assumption”. For more information on “Backward Data Assumption” and back-testing in general, please see the Performance Disclosure.

This article is for informational purposes only and is not intended as individual investment advice or as a recommendation of any particular security, strategy or investment product. Investing involves risk including the potential loss of principal. SEIA is not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Past performance is not indicative of future results. Signature Investment Advisors, LLC (SIA) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Securities offered through Signature Estate Securities, LLC member FINRA/SIPC. Investment advisory services offered through SIA, LLC, 2121 Avenue of the Stars, Suite 1600, Los Angeles, CA 90067, (310) 712-2323. The information provided in this article is for general informational purposes only and does not constitute professional advice. Individual results may vary, and it is important to consult with a qualified professional before making any financial or legal decisions. For details on the professional designations displayed herein, including descriptions, minimum requirements, and ongoing education requirements, please visit seia.com/disclosures. SIA does not accept time-sensitive, action‐oriented messages or transaction orders, including orders to purchase or sell securities, via electronic mail.

Middle East Tensions: What It Means for Markets

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