Conflict in Iran: Macro and market implications

As events continue to unfold in Iran, we recognise the uncertainty facing global investors. The team from Fidelity International is closely monitoring developments across asset classes and sharing updated insights.

While the situation remains fluid, we do not see this as a regime shift akin to Venezuela, given Iran’s highly institutionalised governance. Using our node-based framework, we assess potential scenarios and likely paths ahead.

In this note:

• Salman Ahmed, Global Head of Macro and Strategic Asset Allocation, outlines key conflict scenarios.

• Niamh Brodie Machura, Chief Investment Officer, Equities, highlights risks and equity positioning.

• Marion Le Morhedec, Chief Investment Officer, Fixed Income, reviews fixed income implications.

• Matthew Quaife, Global Head of Multi Asset, emphasizes resilient, diversified portfolios.
  

View the full Fidelity International note (PDF)

Tariff announcement: Thoughts from Viral Patel - Director of Research, Australia

Liberation day or ‘T-day’ (Tariffs not Trump) was 2 April 2025. And it was a big day.

History of tariffs - Why is the US is raising tariffs?
Since the end of WW2, the US has significantly dropped tariffs to allow the world to recover, and then grow, based on the US economy and consumer engine. The proposed tariffs could take effective rates back to the start of the 1900s. This would be the most painful for countries that have large exports to the US. Plus, for many of these countries, they have not contributed their fair share to NATO while relying on the US to defend them. Now, they have to increase their defense spend and face tariffs, and the combination of those two things has the potential to make a significant negative impact. On the other hand, the US government would look to benefit from these tariffs and be able to pay back some of their debt. However, this will have an impact on inflation and global growth, which will in turn impact markets. With that being said, the impacts will differ by country, sector and company, and that is where active management can uncover opportunity.

Existing US effective tariff rates (custom duty/total imports)

What was announced on 2 April 2025
The tariff announcements were a lot higher than the market anticipated. The good thing is that there should be more clarity, especially around what could be the worst-case scenario, which is what was recently announced in the reciprocal tariffs. This is shown in the list below of recently announced reciprocal tariffs.

Now the stage is set for bilateral negotiations. If those aren’t successful, it will lead to current tariff levels. If successful, it could lead to some lower tariff levels than what is now in market. Given we are unlikely to see the end of this news cycle and policy developments, investors should expect market volatility to remain elevated in the coming days and weeks. 

Impacts on different countries
There are clearly both winners and losers emerging, which makes careful stock selection critical to navigating this challenging environment. Our global platform gives us a clear advantage in gathering real-time on-the-ground information and enables us to assess potential opportunities by region with analysts in our offices across the globe. Approximate impact on regions can be seen in the chart below showing imports and exports from the US to various countries across the world. 

US liberation day - reciprocal tariffs in focus
Approximately 15 trade partners account for nearly all the trade deficit in the US

As we can see from these illustrations, Australia will only have a 10% tariff with about USD$20bn of exports to the US. And that is before any negotiation. India with 26% on USD$88bn. Pharma, which is a big export, is exempted. IT will be impacted, but the volatility has created opportunities for investment in the sector. Notably for India, as compared to China and other Asian countries, it has fared better and provides them with a competitive advantage over many other Asian countries. These new tariffs could have the biggest impact on China, EU, Mexico, and Canada given the significant amount they export to the US.

Australia: Relatively low impact given lower level of exports to the US and lower tariffs
As we better understand the tariffs, we see that there are different levels of impact. For example, pharmaceuticals are exempted from tariffs so this could have a positive impact for our big pharma manufacturers. For those companies with US based manufacturing, we see this as a net positive, but for those manufacturing in high tariff countries and exporting to the US, this could hurt. Retailers importing from China could potentially get better rates as capacity frees up if we see China exports to the US fall. Added complexity in the global supply chain could benefit those with systems that help ease the additional complexity. The impact on banks could come from lower growth or higher defaults for companies exporting to the US, but no first order impacts from the tariffs. For metals and mining, the impact is more around 2nd order impacts on Chinese growth, based on what impacts the tariff could have. We believe REITS and infrastructure should benefit in a volatile environment. We have an Australian election coming up, which will be a big driver on growth and markets. The election result could also impact outcomes from negotiations with the US government on tariffs. In Australia, we view tariff and election uncertainty as a driver for higher volatility, for now.

2020/2021 Year in review

In the last 12 months, we've witnessed a period of extraordinary change yet despite the odds, markets are holding up incredibly well. Our investment experts from around the world share insights from their region and look and some of the opportunities and pitfalls facing investors in the new financial year.

To read through the full review, click here

Volatility: 10 key messages for investors

The attached note takes a look at the 10 key messages to help investors steer their portfolios through volatile times. The key points are as follows:

1. Volatility is a normal part of long-term investing

2. Over the long term, equity risk is usually rewarded

3. Market corrections can create attractive opportunities

4. Avoid stopping and starting investments

5. The benefits of regular investing stack up

6. Diversification of investments helps to smooth returns

7. Invest in quality, dividend-paying stocks for regular income

8. Reinvest income to increase total returns

9. Don’t be swayed by sweeping sentiment

10. Active investment can be a very successful strategy

Read more

A time for imagining

Market leaders have changed dramatically over the last ten years. We’ve seen the rise of companies that have either disrupted an existing industry or challenged incumbents. So what have we learnt from the past decade that we can apply for the future?

Read more

The financial power of women

A state-of-the-nation report on the barriers to women investing.

The key points are as follow :

• The hurdles women face

• What women want

• Unlocking our financial power

• Myths busted

• What the investment industry can do

• A level playing field in retirement

Read More

Volatility: 10 key messages for investors

Fidelity International

Financial markets can be subject to periods of event-related volatility during which investor confidence can be significantly undermined. Here, we provide 10 key messages to help investors steer their portfolios through volatile times.

The main points are as follows:

• Volatility is a normal part of long-term investing

• Over the long term, equity risk is usually rewarded

• Market corrections can create attractive opportunities

• Avoid stopping and starting investments

• The benefits of regular investing stack up

Read more