Global markets are currently experiencing increased volatility due to the escalating conflict involving Iran, particularly because of its impact on oil supply.
Iran sits near the Strait of Hormuz, a critical shipping route for around 20% of the world’s oil. Disruptions or threats to this supply have pushed oil prices above US$100 per barrel and caused sharp price swings as markets react to ongoing uncertainty.
Higher oil prices flow quickly through the global economy. They increase fuel and transport costs, which in turn raise the price of goods and services. For Australia, which relies on imported fuel, this can lead to higher petrol prices, rising inflation and pressure on economic growth.
Financial markets tend to react rapidly to these conditions. Share markets can become more volatile as investors factor in rising costs, potential interest rate changes, and the risk of slower global growth.
In short, the conflict is creating uncertainty around energy supply, and that uncertainty is driving the current market volatility.
The Australian Food Super portfolio remains steady.
Super is designed with the long-term in mind. While short-term market dips can have an impact, history shows that markets tend to recover and grow over the long run. That’s why staying invested and focused on your long-term goals is often the most effective approach.
Are you thinking of switching your investment?
Sometimes when super balances fall because of global market volatility, a typical reaction is to want to move out of higher risk investment options and switch to something that doesn’t fluctuate daily, like cash. But this might not be the right move for you.
Switching investments at the wrong time may cost you real money so it should always be a considered decision. If you are thinking of switching you should get advice to ensure your decision aligns with your long-term goals.
You trust us to manage your super in the good times. You can trust us to apply the same expertise in these difficult times too, keeping in mind that for the short-term, markets will continue to be rocky. The Australian Food Super portfolio is well positioned to navigate the challenges ahead.