Despite significant developments — such as Ukraine’s use of US-supplied missiles on Russian territory and Moscow’s alarming nuclear rhetoric — investors have shown limited reaction, raising concerns among some that longer-term risks are being underestimated.

Nigel Green, chief executive of deVere Group, criticized the subdued market behavior, saying the geopolitical landscape was ripe for volatility.

“The combination of rising geopolitical uncertainty, potential tariff adjustments under the Trump administration, a potential return of rising inflation and other global risks such as tensions over Taiwan is a recipe for increased market volatility,” he said.

While US markets initially fell, they quickly recovered, suggesting that investors' focus may have shifted elsewhere.

Shane Oliver, chief economist at AMP, told InvestorDaily that this behavior was due to the familiarity of such outbreaks.

"We have seen these outbreaks in the war in Ukraine (and Israel) before and they have subsided without lasting impact on the investment market. The latest flare-up looks a bit like posturing by each side before Trump takes over and tries to get some kind of peace agreement or cease-fire,” Oliver said.

"Russia's changed nuclear doctrine doesn't really have much of an impact, and whether or not Putin uses nuclear weapons will not be determined by what their doctrine says, but rather by whether he feels truly threatened, and I don't think do it now.”

But for Green, the subdued reaction may signal misplaced confidence.

He said any escalation — whether from retaliatory Russian action or increased U.S. involvement — could send shockwaves through risk-sensitive sectors and currencies.

Adding to the complexity is the potential revival of protectionist policies by the incoming Donald Trump administration, which could disrupt global supply chains and fuel inflation.

“Tariffs and trade restrictions often have unintended consequences, including higher costs for businesses and consumers. In this environment, companies highly dependent on international trade or sensitive to fluctuations in commodity prices can be particularly vulnerable,” Green said, emphasizing the importance of defensive strategies such as gold and utilities in volatile times.

Despite the risks, Green sees opportunities amid the turbulence.

“Companies in sectors such as defense, cyber security and energy can benefit from the changing geopolitical landscape. At the same time, rising volatility could create attractive entry points for those willing to act decisively,” he said.

"Complacency is not an option," Green said, adding that markets may have reacted modestly so far, but "the real test lies ahead."

"Now is the time to prepare, adapt and stay ahead of the curve."