Global markets opened on shaky ground this week amid renewed tensions in the Middle East. While US markets suffered the most, FTSE100 he didn’t escape unscathed.

The price of crude oil rose 2.78% to $93 a barrel as the conflict in Iran raised fears of further supply disruptions in the Strait of Hormuz.

Could this be the beginning of another market downturn?

AI bubble

Continued geopolitical instability means investors are more cautious than ever about risky AI-based tech hype. On Monday (June 8), Korea’s tech-heavy index KOSPI fell 9% within minutes of opening.

Nasdaq 100 technology giants Apple, Nvidia AND Microsoft rely on Korean suppliers SAMSUNG AND SK Hynix for memory chips. But the United States is not alone in suffering.

Shares listed on UK stock exchanges, e.g Diploma, Smiths Group AND Rolls-Royce they also rely on Korean suppliers. Meanwhile, miners, among others RioTinto AND Glencore a broader deterioration in the situation on Asian markets may have an indirect impact.

What does this mean for British investors?

A market downturn can be a once-in-a-decade opportunity to buy high-quality companies at bargain prices.

Naturally, stocks exposed to AI and supply chain disruptions remain risky. However, the domino effect across the market makes everything cheaper – even stable and reliable supplies.

To take Legal and general (LSE: LGEN), for example. The major insurer currently offers the highest dividend yield on the FTSE 100. However, while the overall index is up 70%, L&G’s price is only slightly higher than in 2016.

Logic dictates that when the market rebounds, stocks can gain significantly as investors flood back in. But why have they struggled to make a profit over the last decade?

Risk factors to consider

Gains have been uncertain recently as the UK economy grapples with uncertainty over geopolitical risks. This outcome had an undue impact on the insurance sector, leading to: quotation discount.

It still faces risks from tariff instability and a conflict in the Middle East that could drag on longer than expected.

Still, the latest results were impressive. Underlying operating profit rose 6% year-on-year to £1.62 billion, while pre-tax profit rose 143% to £807 million. It performed particularly well in the institutional pensions area and benefited from asset sales.

And with a Solvency II ratio of 217%, it provides significant dividend cushion even in the event of a downturn. The group’s recent £1.2 billion share buyback – the largest in its history – further confirms its commitment to shareholder returns.

The most significant thing

Stock market crash seems increasingly likely in the face of the double whammy of supply chain shocks and a possible AI bubble. However, investors should not panic. Now is the perfect time to pursue infrequent, undervalued opportunities, and I believe the legal and general field is worth considering.

When the market inevitably recovers, the stock may never trade at such a low price again.

And they’re not alone – there are a few others I’ve been wondering about M&G, Imperial Brands AND Diageo. All three companies boast high yields and solid dividend records, but despite powerful short-term performance, they face price depreciation.

As the drama unfolds, consider cutting back on riskier tech positions and shifting funds to companies with solid earnings potential and a more defensive stance.

Then sit back and wait for the storm to pass.

Is it worth investing £5,000 in Legal & General Group Plc now?

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Mark Hartley owns shares in Legal & General, Diageo and Diploma.