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Nearly two months into the conflict in Iran, global stock markets are staging a defiant rally. From the US to Taiwan and South Korea, a disconnect has emerged: while the geopolitical tensions remain high, equities are charging back toward all-time highs.<\/p>\n
After an initial shock, financial markets have largely looked past the conflict to focus on corporate fundamentals, even as oil prices remain elevated. Investors are piling back into the artificial intelligence trade and emerging-market stocks, signaling that the worst of the volatility is now in the rearview mirror. The US dollar has mostly given back its gain from the start of the conflict.<\/p>\n
\u201cMarkets may be applying the \u2018transitory\u2019 principle to a situation that will continue to work its way through the system over a prolonged period of time,\u201d said Magdalena Polan, head of EM macro research at PGIM Fixed Income. \u201cInvestors are continuing to focus on global liquidity, adopting a glass-half-full read of fundamentals.\u201d<\/p>\n<\/p>\n
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Here are the five reasons why there hasn\u2019t been a more negative reaction to the geopolitical conflict:<\/p>\n
Peak uncertainty<\/p>\n
Analysts say that markets have already priced in a worst-case scenario and believe in a potential offramp from the conflict. With officials in both Washington and Tehran keeping their doors open to talks, and an extended ceasefire declaration, markets have remained confident a deal will be done. In other words, while geopolitical tensions linger, there\u2019s growing belief that diplomacy \u2014 rather than a full collapse \u2014 is the likely end game.<\/p>\n
Dip-buying mentality<\/p>\n
Rapid-fire headlines and President Donald Trump\u2019s frequent changes in course have caught many investors off guard. Many are referring to the Ukraine-war playbook from early 2022, when an initial equities selloff and commodity price surge soon reversed to business as usual. Years of headline-driven volatility and a dip-buying mindset have further reinforced investors\u2019 reluctance to stay bearish for too long.<\/p>\n
Oil cushion<\/p>\n
The war\u2019s energy supply shock may have pushed oil and gasoline prices higher, but outside of acute shortages in some emerging countries, it has not yet triggered the broad economic shutdown many feared. Record releases from strategic petroleum reserves, some spare capacity among major oil producers, and demand destruction have so far cushioned the impact. However, prolonged disruptions in the Strait of Hormuz could still escalate into more severe economic consequences.<\/p>\n
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Robust earnings\u00a0<\/p>\n
Company earnings have given markets a much-needed shot in the arm. Nearly 80% of the S&P 500 companies reporting first-quarter results so far have beaten analyst earnings estimates, according to data compiled by Bloomberg. A number of brokers have already revised up earnings growth for the year, leading analysts to turn more upbeat on fundamentals.<\/p>\n
AI is back<\/p>\n
Technology shares have been the major driving force behind the stock rally as earnings show resilience amid the war, thanks to solid artificial-intelligence demand. On Thursday, SK Hynix reported a fivefold jump in quarterly profit as the South Korean memory chipmaker reiterated plans to ratchet up its spending. This comes after Taiwan Semiconductor Manufacturing Co. raised its 2026 revenue outlook while Samsung Electronics Co. posted an eightfold jump in quarterly profit. Analysts say that upcoming earnings and spending plans from hyperscalers will be key catalysts for further upside.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#reasons #global #markets #holding #war #Iran<\/p>\n","protected":false},"excerpt":{"rendered":"
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