Greg Smith: What investors should watch next

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That resilience is now being tested following the announcement of a blockade of the Strait of Hormuz, one of the world’s most critical oil shipping routes. The move comes after the breakdown of diplomatic talks with Iran and it remains unclear whether this represents a sustained escalation or a negotiating tactic. Energy prices remain volatile, with Brent and US light crude oil both trading at around US$100 per barrel – reinforcing the potential for this to evolve into a broader, energy-driven macroeconomic shock. However, it is worth keeping this move in perspective. While prices have risen quickly (from around US$65-US$70 just prior to the war), they remain below the peaks seen during previous major energy shocks. Brent crude, for example, is still trading below levels reached at the onset of Russia’s full-scale invasion of Ukraine, the Arab Spring and the pre-Global Financial Crisis highs – suggesting that while risks have risen, markets are not yet pricing in a worst-case scenario. There are also echoes of last year’s trade tensions. Markets were repeatedly rattled by escalating rhetoric, tariff threats and firm ultimatums, only for conditions to stabilise as negotiations resumed and partial agreements were reached. “Taco” (“Trump Always Chickens Out”) appears to be back, with this pattern of escalation followed by de-escalation helping to underpin the resilience seen across global markets. Whether a similar dynamic plays out this time remains uncertain. The stakes appear higher, with direct implications for global energy supply, rather than just trade flows. While it is possible that the current situation follows a familiar path of brinkmanship and eventual resolution, it is equally plausible that outcomes are more prolonged or disruptive. This distinction is important. Unlike demand-driven inflation, where rising prices reflect strong economic growth, energy shocks are supply-driven. They act as a tax on both consumers and businesses – lifting costs, squeezing margins and reducing discretionary spending power. Historically, such shocks have often slowed economic growth while simultaneously pushing inflation higher – a challenging combination for policymakers and investors alike. Central banks, many (but not all) of which had been edging closer to rate cuts as inflation pressures eased, may now find themselves in a more difficult position. A sustained rise in energy prices is problematic, particularly if inflation expectations begin to move higher again. For markets that have been pricing in a relatively smooth path to lower interest rates (particularly in the US), this introduces a new layer of uncertainty. In New Zealand, this dynamic could create further pressure for households already dealing with rising petrol costs. ANZ this week called for as many as three interest rate hikes over the remainder of the year – a headline-grabbing shift, but one that was in line with current market pricing. The Reserve Bank of New Zealand has previously indicated it would look through the initial impact of oil-driven inflation, but remains acutely aware of the risk of second-round effects, where higher costs become embedded more widely across the economy. For households and businesses already facing cost pressures, there will be hope that such an outcome can be avoided. Closer to home, New Zealand equities have also participated in the recent rebound, with the market remaining within around 5% of its record highs. However, the underlying economic picture is more mixed. While Kiwi manufacturing activity remains in expansion, recent data point to a clear weakening in consumer and business confidence, alongside softer activity indicators more broadly. Rising fuel costs are beginning to weigh on households and businesses alike, with spending increasingly focused on essentials. The services sector is showing particular signs of strain and employment indicators remain soft, reinforcing the idea that economic momentum may be more fragile than the headline data currently imply. For investors, this creates a more nuanced environment. On the one hand, markets have demonstrated a remarkable ability to absorb shocks and recover quickly. On the other, the risks are becoming more complex and increasingly interconnected. Geopolitical developments are now feeding directly into inflation, interest rate expectations and economic growth – all at once. This is very different from the environment that supported global markets through much of the past year, where disinflation and resilient growth provided a relatively stable backdrop. It also highlights an important point: markets are forward-looking, but they are not always perfectly calibrated. Periods of strong performance can sometimes mask underlying vulnerabilities, particularly when sentiment improves faster than fundamentals. None of this necessarily signals an imminent downturn. Markets can remain resilient for longer than expected and geopolitical events can de-escalate as quickly as they emerge. However, the balance of risks appears to be shifting and uncertainty remains elevated. For long-term investors, this reinforces the importance of maintaining a disciplined and diversified approach. Attempting to react to short-term geopolitical developments is notoriously difficult, particularly when markets can move sharply in both directions in a short space of time. At the same time, periods like this can create opportunities. Volatility often leads to greater dispersion in returns between sectors, regions and individual companies – and that is typically where a more active approach can add value. Rather than simply following the market, active investors can adjust positioning, reduce exposure to areas facing rising risks and selectively add to companies that have been indiscriminately sold, despite strong underlying fundamentals. By contrast, passive strategies, by design, continue to track the market, regardless of changing conditions. While this has worked well in broad, rising markets, it offers less flexibility in environments where risks are evolving and market leadership is shifting. However, it is equally important to acknowledge what cannot be known. The path of the current conflict remains highly uncertain and how – or when – it is ultimately resolved is far from clear. Markets may continue to react sharply to new developments and sentiment can shift quickly. The key is not to be driven by headlines, but to remain focused on underlying fundamentals and long-term objectives, while recognising that uncertainty is likely to remain a defining feature of the current environment. As the current backdrop shows, markets can be both resilient and vulnerable at the same time. Understanding that balance – and having the flexibility to respond as conditions evolve – will be critical in the months ahead. Generate is a New Zealand-owned KiwiSaver and Managed Fund provider managing over $8 billion on behalf of more than 180,000 New Zealanders. This article is intended for general information only and should not be considered financial advice. The views expressed are those of the author. All investments carry risk, and past performance is not indicative of future results. To see Generate’s Financial Advice Provider Disclosure Statement or Product Disclosure Statement, go to www.generatewealth.co.nz/advertising-disclosures/. The issuer is Generate Investment Management Limited.

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Jun 22, 2026diplomacyUnverifiedUSIsraelIranProxy

US-Iran Peace Deal Live: Iranian President to visit Pakistan on Tuesday as peace talks yield 60-day roadmap

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Advertisement US-Iran peace deal US-Iran Peace Deal Live: Iranian President to visit Pakistan on Tuesday as peace talks yield 60-day roadmap New Delhi,UPDATED: Jun 22, 2026 19:20 IST US-Iran Peace Deal News Live Updates: US-Iran diplomacy gained momentum after a marathon round of talks in Switzerland produced what mediators Pakistan and Qatar described as a roadmap for a final agreement within 60 days.

US Vice President JD Vance said Tehran had agreed to allow nuclear inspectors into the country and work on mechanisms covering frozen Iranian assets, regional ceasefires and the Strait of Hormuz. Vance said discussions on nuclear inspections could begin as early as this week, while technical teams will remain engaged even after Iran's top negotiators returned to Tehran following 18 hours of intensive negotiations.

The talks also established a communication channel to help ensure safe commercial shipping through Strait of Hormuz and a mechanism aimed at preventing renewed fighting in Lebanon between Israel and Hezbollah. Despite the diplomatic progress, tensions remained visible.

Iran had briefly closed the Strait of Hormuz over the weekend, accusing the United States of failing to uphold commitments to halt fighting in Lebanon. However, mediators said discussions were held in a constructive atmosphere and yielded encouraging progress.

Iranian President Masoud Pezeshkian is set to visit Pakistan on Tuesday in a trip expected to focus on bilateral cooperation and follow-up discussions on Islamabad's mediation efforts. Meanwhile, a fragile ceasefire in Lebanon largely held, marking the longest lull in violence in three months of conflict.

Lebanese officials reported near-total adherence to the truce despite isolated incidents, while Israeli leaders insisted any final agreement must ensure Iran cannot use future financial relief to support military activities or regional proxy groups.

Follow IndiaToday.in for the latest updates....Read More Iranian President Masoud Pezeshkian is expected to arrive in Pakistan on a one-day visit on Tuesday. (File Photo: Press TV) 2 Jun 22, 2026 19:20 IST US-Iran Deal: Iranian President to visit Pakistan Iranian President Masoud Pezeshkian will make a one-day visit to Pakistan on Tuesday, Iranian officials said.

Habib Abbasi, director-general of public relations at the presidential office, said the trip will focus on implementing previous agreements and exploring new trade opportunities. Pezeshkian is also expected to "express appreciation" for Pakistan's role in mediating between Iran and the United States, according to Tasnim news agency.

Jun 22, 2026 19:14 IST US-Iran Deal: Here's what happened so far - US Vice President JD Vance said talks with Iran made significant progress, with Tehran agreeing to allow nuclear inspectors, establish mechanisms for handling frozen assets and support efforts to manage regional ceasefires.

- Speaking after negotiations in Switzerland, Vance said discussions on nuclear inspections could begin as early as this week and confirmed that technical talks would continue in the coming days and weeks. - Iran’s senior negotiating team departed Switzerland for Tehran after 18 hours of intensive discussions, while technical experts remained behind to continue work on the Islamabad memorandum of understanding.

- Pakistan and Qatar, which mediated the talks, said Washington and Tehran agreed on a roadmap aimed at reaching a final agreement within 60 days and described the first round of negotiations as encouraging. - The two sides also agreed to establish a mechanism to help prevent clashes in Lebanon and create a communications channel to safeguard commercial shipping through the Strait of Hormuz, a vital route for global oil supplies.

- The talks followed an interim agreement reached last week and continued despite renewed tensions after President Donald Trump threatened military action against Iran and Tehran warned Washington over its rhetoric. - Iranian President Masoud Pezeshkian is scheduled to visit Pakistan on Tuesday for a one-day trip.

Iranian officials said he would discuss bilateral cooperation and express appreciation for Islamabad’s role in facilitating US-Iran diplomacy. - A ceasefire in Lebanon largely held on Monday, marking the longest period of relative calm in nearly three months of conflict between Hezbollah and Israel, although isolated incidents were still reported.

- Lebanese security officials said adherence to the ceasefire had been "almost total" since Saturday evening, despite reports of limited Israeli military activity in southern Lebanon and drone flights over Beirut. - The conflict in Lebanon has remained a major test for the interim US-Iran agreement, with Tehran previously accusing Washington of failing to ensure an end to hostilities and briefly reimposing restrictions in the Strait of Hormuz.

- Vance said progress had also been made toward reducing tensions in Lebanon, while negotiators worked to establish safeguards aimed at preventing future escalation. - Iranian Foreign Minister Abbas Araqchi said Tehran had secured waivers for oil and petrochemical exports, the release of some frozen assets and the launch of a reconstruction and development programme under the broader diplomatic framework.

- Oil prices, which surged after tensions disrupted shipping through the Strait of Hormuz, fell further after the latest round of talks, easing concerns about global supply disruptions. - Pakistani Prime Minister Shehbaz Sharif described the negotiations as constructive and said the first round of talks had concluded successfully, laying the groundwork for a broader peace agreement.

- Israeli officials signalled support for a diplomatic resolution but stressed that any final deal must ensure Iran cannot use financial relief or released assets to fund military activities or regional proxy groups.

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