No panic, but heightened vigilance and realism for the coming months
30 MAR, 2026
By Julien Serbit from Prime Parters
As the first month of the Iran conflict draws to a close, financial markets have, unsurprisingly, experienced a decline that we can describe, at this stage, as concerning but reasonable. Since the conflict’s main issue is essentially energy-related, it is the price of oil over the coming weeks and its medium-term inflationary consequences that will determine the direction of indices.
It seems quite unwise to make significant adjustments to a diversified portfolio at this time. No one can predict the conflict’s trajectory at this stage, nor anticipate the various sensational announcements Donald Trump is so fond of making. It is important to note, however, that in recent weeks, it has been the bond market that has shown the clearest signs of nervousness.
U.S. military intervention in the Middle East also comes at a high cost and highlights the scale of the U.S. deficit, control over which seems to have been lost post-COVID. With all due respect to Donald Trump, his administration does not appear at all able of altering the trajectory set during the Biden era.
Beyond geopolitics, other issues are giving investors cold sweats. The private credit crisis is on everyone’s mind, and even if comparisons to the events of 2008 and the subprime crisis seem primarily the domain of journalists and headlines, it is difficult to ignore the growing signs of a problem of significant magnitude. The usual ingredients of a financial crisis are present in the private markets space, following years of extensive financial engineering and aggressive marketing, particularly toward retail investors.
On the other side, there are, of course, positive elements. The most impactful of these is undoubtedly the advent of artificial intelligence and the massive investments associated with it. There is no need to reiterate the importance of this technological advancement. However, it is becoming difficult to ignore that the initial phase of “wonder” in the markets regarding AI is coming to an end, giving way to a more pragmatic view of future winners and losers.
For now, the overall picture does not justify significantly reducing portfolio risk, as various countervailing forces appear likely to prevent a stock market collapse. The most powerful factor is political. President Trump is unlikely to sacrifice the upcoming midterm elections for the sake of a protracted and costly conflict in Iran. China, for its part, also has little to gain from a prolonged period of rising energy prices, even if this were accompanied by a “weakening” of its American rival.
Diversification therefore appears, for the time being, to be the preferred solution in the current environment rather than a significant reduction of the risky assets bucket. This situation would need to be reassessed in the event of a military escalation in the Middle East and/or if signs of a major crisis for private assets become more numerous, as contagion to traditional markets would then seem inevitable.
