Goldman Sachs CEO Says Markets Yet to Fully Price In Middle East Conflict

Goldman Sachs CEO David Solomon said financial markets may still be underestimating the potential economic impact of the escalating conflict in the Middle East, noting that investors could take several weeks to fully absorb the geopolitical risks. Speaking at a business summit in Sydney on Wednesday, Solomon expressed surprise at what he described as a relatively calm market response despite the scale of the crisis.

According to Solomon, global markets have shown a “benign” reaction so far, even though geopolitical tensions in the Middle East typically create volatility in commodities, currencies, and equities. He suggested that investors often respond cautiously to geopolitical events unless they clearly threaten global economic growth or disrupt financial stability.

Solomon explained that the cumulative impact of geopolitical developments has not yet fully materialized in financial markets. While investors have shifted some capital toward safe-haven assets, the broader reaction has remained limited. He noted that it could take a couple of weeks before market participants fully assess the short-term and medium-term implications of the conflict.

Rising oil prices have already reflected concerns about potential supply disruptions as the regional conflict widens. Higher energy costs could add pressure to global inflation, a key factor investors and policymakers continue to monitor closely. At the same time, global stock markets have declined slightly while the U.S. dollar has strengthened as investors reduce exposure to riskier assets.

Despite these developments, Wall Street has experienced only modest losses. The benchmark S&P 500 index has fallen less than 1% this week, recovering some of its earlier declines during recent trading sessions. The relatively limited drop suggests that many investors are still waiting for clearer signals about how the situation may affect global economic conditions.

Solomon also emphasized that several macroeconomic factors continue to support the U.S. economy. He pointed to easing monetary policy conditions and a significant relaxation of regulatory pressures as key drivers helping sustain economic momentum. Even with geopolitical uncertainty, he believes the United States remains on a strong economic growth trajectory, supported by favorable macro tailwinds.