Despite significant developments – such as Ukraine’s use of US-supplied missiles on Russian territory and Moscow’s alarming nuclear rhetoric – investors have shown limited reaction, raising concerns among some about underestimating long-term risks.
Nigel Green, CEO of deVere Group, criticised the restrained market behaviour, saying that the geopolitical landscape is ripe for volatility.
“The combination of rising geopolitical uncertainty, potential tariff adjustments under the Trump administration, the potential return of rising inflation, and other global risks, like tensions over Taiwan, is a recipe for heightened market volatility,” he said.
While US markets initially dipped, they quickly recovered, suggesting investor focus may have shifted elsewhere.
Shane Oliver, chief economist at AMP, told InvestorDaily that this behaviour is due to familiarity with such flare-ups.
“We have seen these flareups in the Ukraine (and Israel) war before and it settled back down with no lasting investment market impact. The latest flare-up looks a bit like positioning by each side ahead of Trump taking over and trying to drive some sort of peace deal or cease fire,” Oliver said.
“Russia’s changed nuclear doctrine doesn’t really have much impact and whether Putin uses nukes or not will not be determined by what their doctrine says but rather whether he feels really threatened and I don’t think he does now.”
But for Green, the subdued reaction may signal misplaced confidence.
He said that any escalation – whether from retaliatory Russian actions or increased US involvement – could send shock waves across risk-sensitive sectors and currencies.
Adding complexity is the incoming Donald Trump administration’s potential revival of protectionist policies, which could disrupt global supply chains and stoke inflation.
“Tariffs and trade restrictions often lead to unintended consequences, including higher costs for businesses and consumers. In this environment, companies heavily reliant on international trade or sensitive to commodity price swings may be particularly vulnerable,” Green said, emphasising the importance of defensive strategies like gold and utilities in volatile times.
Despite the risks, Green sees opportunities amid the turbulence.
“Companies in sectors like defence, cybersecurity, and energy may benefit from the shifting geopolitical landscape. At the same time, rising volatility can create attractive entry points for those prepared to act decisively,” he said.
“Complacency is not an option,” Green said, adding that markets may have reacted modestly so far, but “the true test lies ahead”.
“Now is the time to prepare, adapt, and stay ahead of the curve.”
