Investors brace of another shock of volatility following the attacks on Iran.
Gold set for gains amid renewed safe haven demand.
Oil prices are expected to move sharply higher given risks of disruption to supplies.
Freight costs likely to rise given fresh disruption.
Investors urged to keep eye on long-term horizons amid the volatility.
Susannah Streeter, Chief investment Strategist, Wealth Club

”Financial markets are set for another shock of volatility following fresh strikes in Iran. While risks of conflict erupting again were bubbling given the US troop build-up in the Gulf, hopes had been pinned on fresh negotiations, and the decisive military action came sooner than expected. We are set to see another pile-on into assets perceived as safe havens such as gold, as investors look to shelter their money, given the course of the conflict is so unpredictable. Gold had already been hovering close to two-month highs, and demand is looks set to ramp up.

Oil prices had already been creeping up as nerves became more frayed and they are set to shoot sharply higher given the risks of disruption to global oil supplies. Iran has the world’s third largest crude reserves, but the nation also controls the Strait of Hormuz a vital passage for tankers and other ships. The closure of the Strait, through which around 20% of global oil and gas supplies pass, would be hugely disruptive, particularly for other major oil producers in the region like Saudi Arabia. It temporarily shut the Strait during live fire drills earlier in February, exposing the fragility of the global trading route. These risks adding yet more upheaval to freight companies many of which are already avoiding the Red Sea due to attacks by Houthi Rebels. Maersk has temporarily retreated again from Red Sea sailings again on key services, redirecting them via the Cape of Good Hope. This re-routing adds to freight costs and risks snarling up supply chains. With energy and freight costs set to rise, it adds to price pressures, just as inflation appeared to be coming under control in countries like the US and the UK.

Investors have been bracing for a rise in geopolitical tensions and now they are having to buckle up for another rollercoaster ride. 70% of investors surveyed by Wealth Club saw global tensions as the biggest threat to portfolios this year. However, during periods of volatility, it’s also important to remember that time in the market and diversification have consistently been the foundations of successful investing. For investors owning quality companies over the long term, big bumps in the road are part of the journey. Assets such as gold and more defensive stocks including utilities, healthcare firms, companies selling consumer staples and those with reliable, high‑yielding dividends, tend to be more resilient in eras of unpredictability.’’