‘See through’ Iran war? Markets exploit permacrisis instead

ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountDissonance between record-high stocks and a geopolitical shock puzzles many, and a common narrative is that ​investors are “seeing through” the Iran conflict. But there’s another take: this is just the ‌sort of world we’re now stuck in, and blow-by-blow events matter less than mega-trends and long horizons.In an event-packed week like this, arguments cut both ways.Sky-high oil prices are real and do matter - but they could, and have, also dropped 15 per cent to 20 per cent in an hour in this frenetic war environment. Energy experts may fret about intrinsic, long-lasting damage to the physical energy market - ⁠but stock and ​bond markets ruthlessly price forward and assume eventual “normalization” regardless.There’s little doubt that concepts of “polycrisis” or “permacrisis” are gaining ground - not just in politics and international relations but also how markets and underlying economies are being forced to cope.A new world of rivalry, competition, conflict and tension may just see greater risk simmer and persist.That’s easy to conceive of after Donald Trump’s first year back in the White House. The 15 months since his inauguration have seen the world pinballed from a U.S.-sown trade shock ​to domestic institutional upheavals and a geopolitical rollercoaster in 2026 so far - involving both real and threatened U.S. interventions in ‌Venezuela, Greenland and Iran.Investors might try to “see through” the two-month-old Iran war. But even if that flashpoint cools, we are likely to return to Washington’s recriminations against NATO allies who refused to join the U.S.-Israeli attacks on Tehran.A potential end to the 77-year transatlantic alliance comes as the Ukraine war moves through its fifth year.Next month’s U.S.-China summit also becomes a lightning rod. An artificial intelligence and tech arms race between the two biggest economies suggests both are digging in for a long and intensifying rivalry on numerous fronts.If this were all down to Trump, ‌the electoral cycle may bookend ​it. But the shape of this world has ‌been emerging whether he’s been in office or not, with the pandemic a critical catalyst for the retreat of once-dominant globalization.Mark Leonard at the European Council on Foreign ​Relations think tank nuances this emerging state of affairs as a more chaotic global “un-order” rather than “disorder” sown ⁠by a deliberate upending of a rules-based international system.Writing in Project Syndicate, Leonard argues that “un-order” emerges when norms are overtaken by events, leaving “a deeper, irreducible uncertainty” ⁠in their place - a system “beset by episodic bursts of coercion and retaliation.”He warns that Europe’s reliance on rules-based structures leaves it vulnerable, and reckons global crises are becoming “more complex, less predictable, and potentially catastrophic,” and often ​bleed into one another and amplify uncertainty.Or perhaps markets are not in denial at all - but are simply pricing in a world where defense, tech and energy dominance become a spur to some major economies.Whatever the political solutions or even the trajectory of all this, it’s a world you would instinctively assume economies and markets would balk at - a world riven with financial volatility and cowering savers.That has not happened. This is a world of still-steady GDP growth, even expanding trade despite the U.S. tariffs, and tech-driven stock prices at historic…

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