Market turbulence linked to the escalating U.S.-Israel-Iran conflict should be treated as an entry point rather than a warning sign, according to strategists at JPMorgan Chase.
Key Takeaways
JPMorgan sees the conflict-driven sell-off as a buying opportunity.
Energy and defense stocks are viewed as key beneficiaries.
Oil’s spike may fade, while gold could gain further on risk demand.
Some regional growth forecasts were trimmed, and near-term rate cuts look less likely.
Mislav Matejka advised clients to view the recent pullback as a tactical opportunity to build exposure across equities and select commodities.
The bank’s message is clear: history suggests geopolitical shocks tend to trigger short-term volatility but rarely derail broader market cycles.
Why JPMorgan Is Calling for “Buy the Dip”
Matejka argues that Middle East flare-ups are unlikely to produce lasting market damage. Political timelines – including the upcoming U.S. midterm elections in November 2026 – could act as a stabilizing force, limiting the duration of risk-off sentiment.
The firm also points to resilient equity fundamentals. In past crises, including the Gulf Wars, the S&P 500 posted gains of roughly 14–16% in the months following initial shocks. JPMorgan believes a similar pattern could unfold this time.
For investors with a 3, 6, or 12-month horizon, the bank recommends using weakness to gradually add exposure rather than retreating to the sidelines.
Energy and Defense Named “Conflict Leaders”
JPMorgan maintains a constructive view on equities overall but highlights energy, defense, and cybersecurity as primary beneficiaries of the current environment.
In energy, the bank favors names such as Shell, ExxonMobil, and Chevron. It also upgraded European oil majors Eni and TotalEnergies to Overweight.
On the defense side, preferred picks include Lockheed Martin, Northrop Grumman, and RTX. Additional recommendations span energy services firm National Energy Services Reunited, infrastructure-focused Forgent Power Solutions, and AI-driven defense contractor Palantir Technologies.
Oil Spike Seen as Temporary, Gold Risk Premium Rising
Oil prices initially surged around 13% following the latest attacks, but JPMorgan expects the rally to fade, citing ample global supply that could offset geopolitical disruptions.
Gold, however, may retain a stronger bid. Analysts see a near-term risk premium of 5–10%, with a potential year-end target of $6,300 per ounce if tensions persist.
In currencies, the bank has tactically advised unwinding euro-dollar long positions, arguing that higher energy prices typically strengthen the U.S. dollar.
Growth Downgrades and Rate Outlook Shift
While constructive on markets, JPMorgan has adjusted some macro forecasts. The bank trimmed its 2026 non-oil GDP growth outlook for Gulf Cooperation Council economies by 0.3 percentage points due to business disruptions tied to the conflict.
It also no longer expects a March rate cut from the Bank of Israel or Turkey’s central bank, citing inflationary pressure stemming from higher energy costs.
Overall, JPMorgan’s strategy rests on a familiar pattern: geopolitical shocks may rattle markets in the short term, but for long-term investors, volatility often creates opportunity rather than lasting damage.
