Trump’s war is sending these stocks soaring. But should you invest?

At the start of 2026, most investors had neatly constructed outlooks revolving around moderating inflation, rate cuts and steady equity returns. Few had escalating conflict in the Middle East driving oil prices higher on their market bingo cards.

That’s the humbling reality of investing. Even the most sophisticated central bankers and seasoned fund managers cannot predict black swan events. Wars, supply disruptions and inflation spikes tend to arrive uninvited, and markets quickly reprice.

Which brings us to a pertinent question: which Australian stocks benefit from the war and rising inflation risk? In the current environment, the answer may seem relatively intuitive.

Energy and commodity companies tend to be the first-order winners. Companies like Woodside Energy, Santos, Viva Energy and Karoon Energy have seen tailwinds from higher oil and gas prices.

Diversified miners such as BHP and Rio Tinto may benefit as commodity price forecasts trend higher, assuming no broader global demand shock, supported by tighter supply and resilient demand for critical resources like copper. Commodities play a unique role in portfolios, as they tend to benefit directly from inflationary shocks and supply disruptions.

Further out on the risk curve, defence-linked names such as DroneShield have captured investor attention as expectations for global military spending increase as a way to monetise warfare.

Oil may be the world’s most watched commodity, but for investors, the most valuable commodity is the ability to navigate uncertainty.

But this involves some risk. Building a portfolio around a handful of “war winners” may feel compelling currently, but it risks being overly reliant on a single narrative continuing to play out.

History suggests that that rarely happens. Investing through periods like this is less about predicting the next headline and more like preparing for a changing climate. You don’t pack for just sunshine or storms when going on a hike, you prepare for both.

Moreover, markets don’t move in straight lines. They behave more like a web, where pulling one thread sends vibrations through everything else. Higher oil prices may boost energy profits, but they also stoke inflation, which can delay interest rate cuts and compress valuations.

Banks, often seen as beneficiaries of higher rates due to rising net interest margins, may simultaneously face pressure from competition, weaker credit growth and rising funding costs. What looks like a clear tailwind in isolation can quickly become a headwind in context.

Even within the winners, timing matters. BHP’s share price is down around 20 per cent from its recent peak, yet 2026 earnings expectations have risen, potentially offering a more attractive entry point.

That means constructing portfolios that can navigate rising inflation, slowing growth, policy shifts and unexpected shocks. Oil may be the world’s most watched commodity in times of conflict, but for investors, the most valuable commodity is the ability to navigate uncertainty.

This is the uncomfortable truth about stock picking. It’s not just about being right in the company. You also have to be right on timing, magnitude and market expectations. And in a world shaped by unpredictable geopolitical shocks, that challenge only intensifies. A more resilient approach is to accept uncertainty, rather than try to outguess it.

Broad-based exposure through diversified commodity ETFs can act as a liquid hedge, while gold can offer protection during periods of geopolitical stress. While the precious yellow metal has experienced some selling pressure, now could be the opportunity that those who missed the gold bull run late last year have been waiting for.

Diversification remains one of the few “free lunches” in investing. By spreading exposure across sectors, geographies and styles, portfolios are better positioned to withstand a range of outcomes, including the ones no one sees coming.

Investors with strong convictions don’t need to rely on single-stock picking, or even the domestic market, to express them. ETFs provide targeted exposure to themes such as energy, commodities and defence, while still offering diversification within each theme and access to global leaders.

Marc Jocum is a senior product and investment strategist at Global X ETFs Australia.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.