CIO Insights: Iran’s Market Impact

Erin Orekhov: Good morning. This is Erin Orekhov from Voya Investment Management. I'm joined today by Eric Stein, Chief Investment Officer, to talk about the events that happened over the weekend in the Middle East. So Eric, wanted to get a quick take from you on how we should be thinking about this latest geopolitical event. 

Eric Stein: I think the way to think about it is in a broader context. When you and I talked at the beginning of the year, it was with the Venezuela situation, and now here we are talking about Iran two months later. So we've had a variety of geopolitical events so far to start 2026. 

I think while this event had been talked about for the past couple of weeks with U.S. forces gathering toward Iran, no one knew headed into the weekend if it was going to happen or not. And certainly it did. 

To me, the most noteworthy thing was it started with us and Israel attacking Iran. But in Iran's retaliation, they attacked other countries throughout the Gulf region, including airports in Dubai and other countries around the region. That certainly has the potential to escalate into an even more serious situation. 

Erin Orekhov: In terms of market impact, obviously we're seeing a little bit of a sell off in futures markets for the U.S. and then a spike in commodities. But how should people think about navigating the market reaction on a day like today? 

Eric Stein: Look, my rule of thumb with geopolitics is typically these things last for a couple days or a couple weeks. It's typically not a longer term market trend, even though it's a very important geopolitical story. You know, this morning, as you noted, futures are down about 1%. Oil's up about 9%. There are certainly significant market moves, but I wouldn't say they're out of the ordinary for a geopolitical event. And there's other things going on in markets that we were talking about last week that are quite important as well. 

Erin Orekhov: To that point, do you want to share a few of those things that you think are really critical driving forces in the market right now? 

Eric Stein: The most interesting thing we've seen in markets really over the past couple of weeks has been the AI revenue disruption trade. If you go back to 2024, 2025, a lot of it was the AI CapEx trade. And that's still very important from a macro perspective.

But what we've seen over the past couple of weeks started in the software sector, moved to wealth managers, insurance brokers, commercial real estate, legal services, really anything where we thought some of the developments going on in AI—particularly the Claude model from Anthropic—could have significant revenue disruption to various sectors in the economy. 

I think that's really, really interesting. We don't know which sector is going to be next. We don't know exactly how some of these sectors are going to have their revenue outlook impacted on a multi-year view, but I do think the impact will be significant. I expect to see the markets continue to be very heavily focused on this. 

And even if you go back a week or so ago, a piece from Citrini Research had the market sell off a couple percent just on a blog post. So I think geopolitics are certainly front and center this morning and for good reason. I also think the AI trade is going to continue to be the focus point for equity markets. 

Erin Orekhov: Great. Thank you, Eric. I appreciate your insights this morning. 

Eric Stein: Good to talk with you.