History shows that while major conflicts often trigger short-term market turbulence, the long-term trajectory is remarkably resilient. When a large-scale invasion occurs, we typically recognize a recurring pattern: an initial "risk-off" sell-off where safe-haven assets bloom, followed by a recovery that often exceeds initial expectations.
In the long run, stock returns are determined much more by economic fundamentals than by geopolitical headlines. A look back at the start of major conflicts over the past 35 years illustrates this dynamic: while geopolitical events create immediate fear, they rarely materialize into long-term drawdowns.
| Conflict/Invasion |
Start Date |
1-Month Return |
3-Month Return |
6-Month Return |
| Gulf War |
Jan 17, 1991 |
+18% |
+22% |
+22% |
| Afghanistan War |
Oct 7, 2001 |
+4% |
+9% |
+5% |
| Iraq War |
Mar 20, 2003 |
+2% |
+14% |
+19% |
| Crimean Crisis |
Feb 20, 2014 |
+1.7% |
+1.8% |
+8.0% |
| Ukraine/Russia |
Feb 24, 2022 |
+5% |
-6% |
-2% |
| Iran - Isreal - U.S. |
Feb 28, 2026 |
? |
? |
? |
The primary exception in recent history is the start to the Russia/Ukraine conflict, where the market remained down six months later. However, this period of weakness was likely more so due to economic pressures, as raging inflation had to be battled with historic rate hikes, combined with a downturn in business activity.
In conclusion, while geopolitical unrest causes stocks to struggle initially and even though the largest wars of the last three decades have failed to suppress market returns over an extended period, the current situation in the Middle East is noticeably unprecedented in terms of how it started and how it is spreading to neighbouring countries, which draws uncertainty on the length and scale of its impact on global economy.