Nearly two months after the outbreak of the Iran conflict, global stock markets have not collapsed but instead advanced against the trend, continuing their push towards historic highs. This seemingly contradictory "counterintuitive rally" is supported by five structural forces underpinning investor confidence.
A clear divergence has emerged between stock markets and geopolitics, from the United States to Asia-Pacific. After the initial shock subsided, the market shifted its focus from the battlefield to earnings season—artificial intelligence trades regained momentum, emerging market stocks continued to attract capital inflows, and the US dollar has largely erased its gains from the early stages of the conflict, indicating that investor pricing for the worst-case scenario is easing.
"The market may be applying a 'temporary' principle to a situation that will continue to evolve over a longer period," said Magdalena Polan, Head of Emerging Markets Macro Research at PGIM Fixed Income. "Investors continue to focus on global liquidity, interpreting the fundamentals through an optimistic lens."
The following are five reasons, analyzed by media, for the resilience of global markets amid geopolitical conflict.
Uncertainty Has Peaked
Analysts believe the market has already priced in the worst-case scenario and believes a potential exit from the conflict exists. Both Washington and Tehran have kept the door to negotiations open, coupled with the announcement of an extended truce, maintaining market confidence in an eventual agreement.
In other words, despite persistent geopolitical tensions, a growing number of investors believe that diplomatic mediation—rather than a complete breakdown—is the more likely outcome of this conflict.
Deep-Rooted "Buy-the-Dip" Mentality
A constant stream of headlines and frequent policy shifts have caught many investors off guard. However, many cite the playbook from the early 2022 Russia-Ukraine conflict—initial stock market sell-offs and a sharp spike in commodity prices, followed by a relatively quick return to normalcy. Years of experience with headline-driven volatility have deeply ingrained an investor reluctance to hold short positions for extended periods; the mentality of buying on dips is now firmly entrenched.
Strategic Reserves Provide an Oil Buffer
The war-induced energy supply shock has pushed up oil and gasoline prices, but aside from acute shortages in some emerging countries, it has not yet triggered the widespread economic disruption previously feared. The release of strategic petroleum reserves at record levels, some spare capacity from major oil producers, and automatic demand-side reductions have collectively acted as a buffer.
Greg Calnon, Global Head of Public Markets Investing at Goldman Sachs Asset Management, told Bloomberg Television that despite a prolonged blockade of the Strait of Hormuz, current investor pricing assumes a relatively swift return to calm in energy supply秩序. However, if disruptions in the Strait persist and spread, they could still evolve into more severe economic consequences.
Strong Corporate Earnings Boost Market Sentiment
Robust earnings results have provided crucial support for the current rally. According to data compiled by Bloomberg, nearly 80% of S&P 500 companies that have reported first-quarter results so far have exceeded analyst profit expectations. Several brokerages have raised their full-year profit growth forecasts, and analysts' overall assessment of fundamentals has consequently turned more optimistic.
AI Trading Makes a Comeback
Technology stocks have been the primary engine of the current stock market rebound, with solid artificial intelligence demand enabling related companies to demonstrate relative resilience in their earnings despite the war. SK Hynix reported a five-fold jump in quarterly profit last Thursday, with the South Korean memory chip giant also reaffirming plans to increase capital expenditure. Previously, TSMC raised its 2026 revenue outlook, while Samsung Electronics recorded an eight-fold increase in quarterly profit.
Analysts point out that the upcoming earnings reports and spending plans from hyperscale cloud computing providers will be key catalysts for further stock market gains.
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