Over the past week, geopolitical tensions between the US, Israel and Iran have continued to escalate. The US and Israel have launched further waves of airstrikes across Iran, targeting a number of strategic sites including oil depots and other infrastructure. Iran has responded with continued missile and drone strikes targeting US and allied assets across the region.
Political developments have also added to uncertainty. Iran has named Ayatollah Mojtaba Khamenei as successor to his father, Ayatollah Ali Khamenei, while military activity across the region has remained elevated. Most significantly for markets, the Strait of Hormuz has effectively come to a standstill, with only Iran-linked vessels currently able to pass through the key shipping route. Gulf states have begun cutting oil production as a result.
As events continue to unfold, markets have been reacting primarily through energy prices and broader risk sentiment.
Market Moves So Far
The most significant move has been in oil markets. Brent crude rose sharply to around US$110 per barrel on Monday before retreating to roughly US$90. The pullback followed comments from Donald Trump suggesting the conflict could be resolved “very soon” and that he would waive oil-related sanctions. Nevertheless, the earlier spike highlights how sensitive oil prices are to concerns around potential disruption to global supply, particularly given the central role of the Strait of Hormuz in global energy markets.
Equity markets have also declined, although moves have varied across regions. As of Monday, US markets were down around 2.0% month-to-date, while European equities had fallen more noticeably, by around 5.6%. Markets have since recovered somewhat following the comments referenced above, though remain down.
Currency and bond markets have reflected a degree of safe-haven demand. The US dollar has strengthened modestly, while government bond yields have moved higher across major markets. Gold initially rallied above US$5,400 per ounce as investors sought defensive assets, before retreating to around US$5,100 as the stronger US Dollar and fading expectations of near-term Federal Reserve rate cuts weighed on prices.
In this article, we focus on the market impact and implications for investors.
atomos/WTW
VAM Multi-Asset Funds
In its update last week, atomos noted that the immediate market impact of rising tensions would likely be felt primarily through energy markets and shifts in short-term risk sentiment. The developments since then have broadly followed that pattern, seen by the oil prices rising sharply and equity markets experiencing volatility.
The key uncertainty now lies in how long the disruption persists and whether tensions stabilise or escalate further. If the conflict ultimately settles following an initial period of retaliation and market volatility, markets may treat the episode largely as a temporary geopolitical shock. Encouragingly, over the last 24 hours markets have already shown how willing they are to react positively to good news. In that case, oil prices would likely retrace as fears of sustained supply disruption fade, and the broader macroeconomic impact may remain relatively contained.
However, as the war continues, the risk of more sustained disruption increases, particularly given the current situation in the Strait of Hormuz. Should oil flows remain constrained for an extended period, energy prices could stay elevated in the US$90–110 range or potentially higher. Persistently higher energy costs would place upward pressure on global inflation and could weigh on household spending and corporate margins, while also delaying potential interest rate cuts from central banks.
atomos’ Positioning
In periods of heightened geopolitical uncertainty, particularly given the unpredictable nature of President Trump, predicting short-term market outcomes becomes extremely challenging. The past 24 hours illustrate how quickly markets can change, underscoring the importance of avoiding reactive portfolio decisions.
The investment team’s focus on diversification means the VAM Multi-Asset Funds’ portfolios are constructed with allocations to defensive assets designed to provide resilience during periods of market stress. This structural positioning allows the team to monitor events as they develop and respond if clearer risks or opportunities emerge, rather than reacting to short-term volatility.
While market movements may continue as the situation evolves, maintaining a disciplined approach remains important.
Oberweis Asset Management
VAM US Micro and Small Cap Growth Funds
As bottom-up stock pickers, the investment team at Oberweis does not construct portfolios around macro forecasts related to oil prices, inflation expectations, USD strength, or geopolitical developments. While the investment team certainly monitors these factors and considers their potential impact on individual holdings, the team’s experience has taught them that predicting the duration and magnitude of macro events is exceptionally difficult – and positioning a portfolio around such predictions often introduces more risk than it mitigates. Oberweis does not employ explicit hedges against macro variables, nor does it take directional currency positions. Instead, the investment team’s focus remains squarely on identifying companies experiencing misunderstood fundamental change that it believes will drive earnings surprises over the next one to two years.
What the investment team has observed consistently is that periods of macro-driven risk-off selling create compelling opportunities to improve portfolio positioning. The “Tariff Tantrum” in the spring of 2025 is a recent example: broad-based selling created attractive entry points in high-quality companies where the fundamental thesis remained intact despite the headline noise. The team views such dislocations as a feature, not a bug, of its approach – allowing the team to add to positions or initiate new ones at more favourable valuations.
Its base case is not defined by a specific macro scenario, but rather by its confidence in the idiosyncratic drivers underpinning each portfolio holding. Oberweis invests in companies where its proprietary view of earnings power materially exceeds Wall Street consensus – driven by new product cycles, secular tailwinds, management-led transformation, or other durable fundamental changes. These company-specific catalysts are designed to generate alpha regardless of whether the macro backdrop is benign or challenging. The key indicators the investment team monitors are earnings results, guidance trends, and estimate revisions at the company level – not oil futures or currency crosses.
Alquity Investment Management
Alquity India Fund
The investment team does not expect oil prices to derail what it views as a solid macroeconomic environment for India. Q4 2025 GDP growth came in at 7.8% and inflation remains well-controlled. Across the fund’s holdings, following the Portfolio Manager’s recent trip to the country and meeting with nearly 40 companies, the team continues to see strong growth and a resilient consumer demand. Furthermore, many companies have been expanding their solar power capacity over recent years, which makes them more resilient to external shocks such as a spike in oil or LNG prices.
On the macroeconomic impact of energy costs, the team believes India can comfortably absorb oil at $80/bbl in the long-term, and remains broadly manageable even in a scenario where prices spike above $100–110/bbl in the short term. Regarding USD strength, the INR is down approximately 2% year-to-date against the USD. The team believes the recent US- and EU-India trade deals, combined with a robust macroeconomic backdrop, increasing foreign participation in the debt market, and improving sentiment towards Indian equities by foreigners (as sell-side earnings revisions are beginning to take place) should support INR stabilisation against the USD.
Alquity Future World Fund
With regards to the Future World Fund, exposure to the Gulf region (GCC) is below 5%, with the Fund invested across the UAE, Saudi Arabia and Kuwait predominantly in the financial sector. The Fund additionally has two positions in Egypt (fintech and bakery respectively).
Beyond the Gulf, the investment team is mindful of the broader macro transmission risk, particularly through energy prices, and it continues to monitor all its positions across the asset class as the situation develops. As always, given Alquity’s strong fundamental process, the investment team will aim to take advantage of unjustified volatility to add to high-conviction names.
Alquity Global Impact Fund (GIF)
Given its flexible approach, the investment team believes that the Alquity Global Impact Fund is well-balanced to weather all environments. In particular, the portfolio contains several natural offsets to potentially higher energy prices. The Fund’s industrial holdings (e.g. Siemens, ABB and GEA Group) have historically demonstrated strong pricing power and stand to benefit from a potentially accelerating energy transition capex cycle, as any sustained high oil price environment would likely intensify this. Healthcare holdings, which represent an 11% allocation in the portfolio, are largely insensitive to oil price dynamics and second-order effects, and act as a defensive buffer. Moreover, one holding worth noting specifically is Aldar Properties (ca. 1% position), a high-quality and leading real estate developer in Abu Dhabi. Around 58% of the Fund is invested in US equities. Within Emerging Markets, the Fund focuses on high-quality franchises, which are largely driven by structural growth trends. In the semiconductor space, the team believes that both the pricing power and strong demand from its holdings more than offset any near-term pressure in energy costs.
Finally, it is worth noting that the Global Impact Fund is managed through a systematic, quantitative process. Portfolio positioning evolves continuously in response to market signals and factors. The Fund’s process consistently targets quality and sustainability characteristics, which have historically shown relative resilience in volatile macro environments.
Alquity Asia Fund
While the Fund is invested across economies that are sensitive to energy price movements, the investment team does not anticipate any material impact on the long-term fundamentals of its holdings and the multi-decade, secular trends they aim to benefit from. The Fund’s holdings are concentrated mostly in consumer, technology and financial services; and where energy costs are a factor (semiconductors), the team believes both the pricing power and structural demand dynamics of its holdings more than offset any near-term pressure.
For professional investors only.
All market data and statistics referenced in this communication are sourced as follows: Oberweis Asset Management commentary; atomos commentary; Alquity Investment Management commentary as at March 2026.
All information as of 09:00 on 10/03/2026
The scenarios and views expressed regarding the US-Israel-Iran conflict are those of the respective investment managers, based on information available at the time of preparation. They are subject to change without notice and should not be relied upon as a forecast of future events or market outcomes.
The views expressed in this communication represent those of each respective sub-investment manager as at the date stated and are provided for information purposes only. They do not constitute investment advice or a recommendation to buy or sell any security. Past performance is not a reliable indicator of future results. The value of investments and any income from them may fall as well as rise and investors may not get back the full amount invested.
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