Oil prices jump and markets slide after strikes across Middle East

Andrew Prosser, head of investments at InvestEngine, said: “The recent escalation involving Iran has already injected a significant geopolitical risk premium into markets.

“Global stock markets have opened the week lower, with banks and airlines showing some hefty falls.

“The price of Brent crude oil initially jumped by 10 per cent off the back of the news and is a major cause of uncertainty.

“Around 20 per cent of global oil supply passes through the Strait of Hormuz, so any disruption could push prices higher, potentially impacting inflation and the future path of interest rates.

“In times like this it’s easy to get spooked by a few big market falls, but it’s important to stay focused on the long term.

“While your portfolio might take some knocks now, these movements become much less relevant over five, 10, or 20 years.

“History shows that investments are far more likely to grow over the long term, and sometimes the best days follow the very worst.

“Think back to April last year — within a week of ‘Liberation Day’ markets rallied, with US stocks climbing 9.5 per cent, the biggest daily gain since the 2008 financial crisis.

“While volatility persisted, the US then had its best May since 1990, with the FTSE 100 and other global markets following.

“This highlights the value of patience: sometimes the smartest move is to simply sit on your hands and focus on your time horizon.

“Regular investing, such as through our fractional investing platform, can help smooth out market ups and downs via pound-cost averaging — buying more when prices are low and less when prices are high.

“It’s also crucial to think about diversification and risk.

“Holding a mix of stocks, bonds, gold, and cash across different sectors and geographies ensures your portfolio isn’t overly exposed to any one shock.

“Your allocation should also reflect your risk tolerance and how far you are from your financial goals — someone closer to retirement may want more stability, while longer-term investors can afford to take more risk.”