ClockWise: All eyes on Trump

Once again, all eyes are on Donald Trump as a source of geopolitical risk and financial market volatility.

America's return to military involvement in the Middle East could precipitate a wider war, pushing oil prices higher, triggering a sell-off in stocks and deepening bond market concerns about the country's fiscal outlook. But it's also possible that it hastens an end to the current hostilities. 

Geopolitical instability is one of the themes underlying the current era of 1970s style 'Spikeflation'. See related content.

Our strategic allocation to commodities is designed to help at times like this. Tactically we added further to broad commodity exposure – and gold specifically – over the last few weeks, funded out of stocks. 

Many things can happen from here, with the immediate focus on the degree of escalation and any threats to oil shipments.  

Trump’s leverage with both Israel and Iran is much diminished by the weekend‘s action and events could spiral out of control. In one scenario, the US is dragged into a war of regime change. The experience in Iraq and Afghanistan show how prolonged and difficult that can be. 

It’s also conceivable, however, that the US strikes hasten an end to Israel's war with Iran - calling to mind the Six-Day War of June 1967 during which Israel occupied the Gaza Strip and West Bank. 

In our view, heightened market volatility and risk calls for broad diversification and active management. 

For professional investors only. This material is not suitable for a retail audience. Capital at risk. This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.