Financial markets are steeling themselves for a year defined by geopolitical uncertainty, as the White House embraces the so-called "Donroe Doctrine." This policy, a modern revival of the 19th-century Monroe Doctrine under President Donald Trump, seeks to assert American dominance across the Western Hemisphere and potentially further afield. With its publication in a national security strategy last month, investors are now gaming out how this significant foreign policy shift will ripple through global assets in 2026.
Navigating Unpredictable Policy Shocks
Forecasting the market impact of Trump's policies is notoriously challenging, given their unpredictable nature. Potential effects could range from volatile energy prices to disruptions in the import of critical semiconductors that power the artificial intelligence industry. According to Sam Rines, a macro strategist at WisdomTree, investors need a strategic, long-term portfolio framework to navigate this new geopolitical landscape.
While the U.S. stock market's record run has so far shrugged off events like the ouster of Venezuela's Nicolas Maduro, signaling equities' typical short memory for geopolitical risk, significant cross-currents are brewing beneath the surface. Rallies in defense stocks have already been sparked by calls for increased military spending. Meanwhile, the investment community is closely scrutinizing potential U.S. actions concerning Greenland, Iran, and Cuba, while also weighing possible retaliatory moves from global powers like China and Russia.
The stakes were underscored recently when oil prices surged after Trump warned that Iran would "pay a big price" for its internal actions, bolstering the view that global conflicts may intensify this year.
Sectors in the Crosshairs of Geopolitical Risk
Technology and Semiconductor Reliance
The technology sector, which holds the heaviest weighting in U.S. markets, faces potentially massive disruption. The primary risk stems from the possibility that Chinese President Xi Jinping could respond to U.S. hegemony by taking a more aggressive stance on Taiwan, a global epicenter for advanced chip manufacturing.
The vulnerability is stark. Nvidia Corp., the most valuable U.S. stock, derives 16% of its revenue and sources 15% of its suppliers from Taiwan. The broader S&P 500 Semiconductors and Semiconductor Equipment group now carries a substantial 14% weighting in the index. Taiwan Semiconductor Manufacturing Co. (TSMC) is a linchpin, supplying giants like Apple, Nvidia, Broadcom, and Amazon.
"If suddenly Taiwan was taken off the grid, that would have a massive, massive negative implication on our stock market," warned Mark Malek, Chief Investment Officer at Muriel Siebert & Co.
On the flip side, companies with Pentagon contracts, such as Palantir Technologies Inc., could benefit from heightened defense spending. Investors are also turning to U.S.-based chipmaker Intel Corp., seen as a potential beneficiary if global supply chains fracture; its stock has already climbed more than 28% year-to-date.
Energy and Defense in Focus
The energy sector remains acutely sensitive to tensions in the Middle East, particularly involving Iran, as recent price jumps demonstrate. The doctrine's focus on American projection could lead to volatility in oil and gas markets depending on diplomatic and military engagements.
Concurrently, the defense and aerospace industry is positioned for potential tailwinds. The explicit goal of projecting American dominance logically correlates with increased military and security expenditures, a trend that has already begun to lift relevant stocks.
Strategic Positioning for a Volatile Year
For investors, 2026 is shaping up to be a year where geopolitical strategy is as crucial as financial analysis. The unfolding Donroe Doctrine introduces a layer of complexity that demands a focus on supply chain resilience, sector-specific vulnerabilities, and companies that may gain from a renewed emphasis on national security and domestic production. While broad markets may appear resilient, the real action—and risk—is likely to be found in these specific, high-stakes sectors.
