- March 11, 2026
This Too Shall Pass
This article is for general information only and is not personal financial advice.
It’s been a brutal two weeks in the share market.
The US and Israel have picked a fight with Iran in the most brutal of fashions. Bombs, assassinations, and heaps of name-calling.
But Iran is going down swinging. And like a drowning man, it’s taking everyone it can with it. It’s struck many neighbouring countries without provocation, and has managed to get past Israel’s Iron Dome missile defence system. It’s also struck US military targets in the region.
The ASX200 futures fell a touch over 8% from high to low. But a chunk of that has already recovered, and the reality is we’re in a solid support zone.
The two dotted blue lines in the following chart were drawn in the middle of last year. And they show their relevance still today.
That band between the two dotted lines is a strong buying support zone. It’s not a concrete surface for the market to bounce off.
It’s more like a child wearing inflatable arm bands. When those arm bands go under the water, they want to rise to the lower-density air above. But that doesn’t mean they can defy any force.
There are buyers at these prices. But there’s still downside risk here.
Lesson 1: Major technical areas hold enormous power over the markets.
We can do a technical deep dive discussion another day. But suffice it to say, we don’t need to look at every technical indicator and level. We just need to focus on the big and important ones.
Let’s zoom out.
The following chart has monthly bars. Notice the two highlighted pink sections with the massive falls?
The GFC and the COVID lockdowns.
There are a couple of takeaways from the bigger picture.
First, the trend is still intact.
The market has several key supports below here, which will bring in fresh buyers. This is a healthy pullback. But it’s not unusual. It’s no reason to hit the panic button just yet.
The overall theme remains optimism. We are only just off all-time highs.
But this leads right into the second point.
We ain’t seen nothing yet. Things can get a lot worse than they are now.
A lot worse.
Lesson 2: Look at the bigger picture.
We’ll discuss how to prepare for the worst a bit further on, but first, let’s cover what’s happening with other markets.
The Global Picture
Globally, we broadly saw very steep two-day declines.
South Korea’s KOSPI 200 index futures fell over 20%. The DAX in Germany fell 11.6%. Just two examples.
There were plenty of quick, sharp pullbacks, but there’s been a bounce now as well. A bit of pressure has been released.
A look at the US stock market makes you wonder if there’s really a war going on at all. Sure, it’s down…sort of.
The S&P500 futures fell about 6.5% from the high. But it’s far from dramatic. More like a slow and sleepy risk-off rotation.
So what’s all the drama about then?
Well, it’s mostly about oil. And as luck would have it, the US has lots of domestic oil. Not to mention they just colonised liberated this oil-rich country very close to home called Venezuela.
The markets are banking on Venezuela feeling very generous about its new-found freedom from tyranny and oppression.
Isn’t that a happy coincidence.
The daily chart of the WTI oil contract shows a dramatic spike up to $120, only to quickly fade back to the $90 level.
It is dramatic, but if you zoom out to a weekly chart, it’s been here before plenty of times. In fact, zooming out, you’ll be reminded that oil has just been really cheap lately.
That was probably going to end one way or another in time.
So, we don’t have to see this as some kind of doomsday situation.
But why is oil so important?
The whole economy runs on oil. If we run out, we’re kinda screwed. At least in the short-term, until we get alternative energy sources in play.
This is pretty obvious stuff. But the secondary impact that also has the market spooked is inflation.
We’ve been warning about runaway inflation being a potential problem for a few months now. Not as something that’s already happened, but as a very real scenario to keep in mind.
Well, the price of oil feeds into the price of everything, since it’s tied to the movement of goods. So when the price of oil goes up, the price of everything else goes up.
That’s a big tailwind for inflation to soar.
And inflation means higher interest rates.
So, in Australia, the markets have gone from pricing two lazy hikes this year, with one already in the bag, to three at a minimum. In fact, there’s a fourth hike about half priced in for this year.
That’s a big upset for markets.
They want the cheap money train to keep running forever.
But alas, life is not like that. So what will happen next?
This brings us to the topic of scenario planning.
The Scenarios
Good investors position for the best, but prepare for the worst.
It’s very important to map what could happen. Not just what we think will happen or what we want to happen.
Scenario planning is often overlooked.
This is an exercise for you to take away and do yourself. Or at least have a decent think about.
I’ll give you a few ideas to get started.
1. The war in Iran ends quickly, with a negotiated peace deal.
This might include some kind of regime change or an agreement for Iran to soften its harsh anti-protest and religious laws.
We would see the quick resumption of oil trade through the strait of Hormuz, leading to a quick stabilisation in oil prices. Inflation fears would ease. Bonds up, stocks up, oil down. Back to business as usual.
Let’s put a probability on this of 15%. It’s good to start thinking in terms of probabilities, accepting that we will always get them some degree of wrong.
2. The conflict widens
Further combatants entering the conflict on the side of the US will likely hasten the end of the war, as the US is the stronger power.
However, the biggest risk here is that a player like North Korea decides to get involved. After seeing the US take down Maduro in Venezuela and now Iran, there could be a feeling that North Korea is the third or fourth name on a list.
All it takes is a dictator with total control and a little dash of runaway paranoia, and you’ve got yourself a situation.
This may be in the 1-5% probability range, but it has the possibility to set the world back a decade on several fronts.
If North Korea did decide to get involved, countries like Russia and China might carefully weigh if this is the time to make a more direct stand against the US.
While escalation to that extent may seem unlikely, the ramifications would be world-altering. There is potential for nuclear war, for one. But even a traditional war directly between the US and China would likely be devastating.
The probability of this might sit at less than 1%.
3. The slow grind of war continues
The most likely path, given the information we have right now, is a prolonged war. Iran would likely continue to disrupt global trade through the strait of Hormuz, and oil would be under constant threat.
In this scenario, we likely see alternative oil supply come on in places like the Americas and Australia. We may also see a resurgence in demand for Electric Vehicles (EVs) and other technologies that decrease our reliance on oil.
There may continue to be some upward pressure on inflation, and several countries, including the US, may enter an interest-hiking cycle.
We could see increased volatility in the markets and sector rotation. This scenario may have a 50-70% probability.
While there are many other scenarios, the point here is just to start the process of thinking about what’s possible.
The Edge
It may feel like your portfolio has taken a hammering over the past couple of weeks.
If you get that feeling, I invite you to zoom out and take a look at the bigger picture.
Is the world going to collapse because of another war in the Middle East? It didn’t implode through all of the carnage in that region since the October 7th attacks.
During that time we saw big disruptions to international shipping in the Suez Canal from Houthi attacks.
We’ve seen a large and prolonged conflict in Ukraine for many years now. At the start of that war the fear was that a global fertiliser shortage could lead to mass starvation.
Of course, these doomsday scenarios are possible. We shouldn’t be arrogant enough to say ‘that could never happen’. World War I and II happened. The Great Depression happened. The GFC. COVID.
The black swan events happen. So prepare for them.
And certainly in this case, a prolonged or widened war with Iran could get nasty.
But the markets find solutions to problems. That’s what the markets are. A 24/7 solution machine.
If we need more oil, we’ll find a way. If we have to rapidly switch to EVs, then we’ll do that. If we have to start burning coal in cars, then we will.
Whatever it takes to get through and keep growing, that’s what humans do. That’s what markets do.
So map out your scenarios. Think about what could happen. Know what you’ll do in that case.
Position for the best, but prepare for the worst.
Check out Explosive Growth for leading stock market research and The Week’s Edge for our ongoing take on the markets and investing.
Until next time, happy investing.
Izaac Ronay
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Izaac is a broker and trader with Vitti Capital. He brings over 10 years of trading experience with top-tier global trading houses and 20 years of experience analysing and investing in ASX listed equities.
This publication has been prepared by The Markets IQ, a division of Vitti Capital Pty Ltd (ABN 13 670 030 145), which is a Corporate Authorised Representative (001306367) of Point Capital Group Pty Ltd (ABN 41 625 931 900), the holder of Australian Financial Services Licence 518031. This report is for general information only and does not take into account your objectives, financial situation, or needs. It is not personal financial advice or a recommendation to buy, hold, or sell any security. You should consider whether the information is appropriate in light of your circumstances and obtain professional advice before making any investment decision. This report is intended solely for wholesale, sophisticated, or professional investors within the meaning of the Corporations Act 2001 (Cth).
Any views, probabilities, valuations, technical levels, or forecasts expressed are strictly the opinions of the authors as at the date of publication, based on publicly available information and assumptions which may change without notice. They are illustrative only and not predictive of future outcomes. Past performance is not a reliable indicator of future performance.
