Markets generally shrug off geopolitics, so when Israel, Iran and the United States launched missiles at each other, investors barely looked up. Even at the height of recent tensions, when headlines appeared especially dire, the S&P 500 held its nerve.
By the time the dust settled, it was flirting with record highs, underscoring how little lasting fear the episode generated.
While there were risks, investors bet the conflict was more symbolic than systemic: no oil disruption, no full-scale retaliation, no contagion to Gulf shipping. In the absence of real economic spillover, the logic goes, you buy the dip and ignore the drama.
Such movements reflect a popular market meme: “Nothing ever happens”. Born on the 4chan bulletin board some years ago, it’s now shorthand for a world where even wars barely dent the S&P.
For some, that seems complacent. Investing veterans might counter that it’s easy to overestimate the impact of headlines and to underestimate the market’s focus on liquidity, earnings and central banks. Unless geopolitics alters economic fundamentals, the default reaction is to fade the panic.
This isn’t new. A 2024 JP Morgan study found markets underperform slightly in the three months after a geopolitical shock, but average six- and 12-month returns are identical to periods without conflict.
“When you consider the average equity investor experience,” it said, “it’s as though the event never happened.”
Of course, if events suddenly worsen then this muscle memory of calm could prove costly. But, for now, markets remain unshaken.
