The pain of Trump’s war could get even worse

May 11, 2026 — 5:35pm

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Investors appear to have convinced themselves that the worst of the war-induced energy crisis is largely over, based on some recent records notched up on global markets.

The world’s two biggest sharemarkets – those in the US and Japan – both hit all-time highs last week, while Australia’s market wasn’t too far off its previous peak, either.

Of course, there is still volatility day-to-day, but the overwhelming sense lately has been that equity investors are in an optimistic mood.

So, does that mean the most unpleasant economic effects of Donald Trump’s military foray are also behind us? Unfortunately, it’s not that simple.

Don’t let recent sharemarket bullishness mislead you: there’s still some way to go before the energy crisis is finished. Even if Trump is able to strike a lasting peace deal – a big if – we won’t know the full impact of the war on our actual economy (as opposed to the sharemarket) for quite some time.

It’s almost become a cliche for business types to bemoan the uncertain outlook but lately they have been right. No doubt Treasurer Jim Chalmers will reiterate such warnings about the uncertain economic times in which we are in his budget speech this week.

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