Missiles are flying, yet global stock markets are rising: Five reasons to understand this reverse celebration

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Nearly two months after the outbreak of the Iran conflict, global stock markets have not collapsed but instead have rallied against the trend, continuing to advance toward historic highs. Behind this seemingly paradoxical "reverse celebration" are five structural forces supporting investor confidence.

From the United States to the Asia-Pacific, a distinct rift has appeared between the stock market and geopolitics. After the initial shock subsided, the market turned its focus from the battlefield to earnings season—artificial intelligence trading regained momentum, emerging market stocks continued to attract capital inflows, and the dollar has largely erased its gains from the early stages of the conflict, showing that investor pricing of the worst-case scenario is loosening.

"The market may be applying the 'transitory' principle to a situation that will continue to ferment for a relatively long period," said Magdalena Polan, Head of Emerging Markets Macro Research at PGIM Fixed Income. "Investors are continuing to focus on global liquidity and are interpreting the fundamentals with an optimistic perspective."

The following are five reasons identified by the media for the resilience of global markets amid geopolitical conflict.

Uncertainty Has Peaked

Analysts believe the market has priced in the worst-case scenario and trusts that there is an exit to the conflict. Both Washington and Tehran have kept the door open for negotiations, and the extension of the ceasefire declaration has maintained market confidence in eventually reaching an agreement.

In other words, although geopolitical tensions persist, more and more investors believe that diplomatic mediation—rather than total breakdown—is the most likely outcome of this conflict.

"Buy the Dip" Mentality is Deep-Seated

Relentless headlines and Trump's frequent policy shifts have caught many investors off guard. However, many are citing the 2022 Russia-Ukraine conflict as a model— the stock market sold off in the early stages, commodity prices surged, and then quickly returned to normal. Years of headline-driven volatility have deeply entrenched investors' reluctance to hold short positions for extended periods; the "buy the dip" mentality is well entrenched.

Strategic Reserves Create an Oil Buffer

The war-induced energy supply shock has pushed up oil and gasoline prices, but except for some acute shortages in certain emerging countries, it has not triggered the widespread economic shutdowns previously feared by markets. Record releases of strategic petroleum reserves, partial spare capacity from major oil producers, and automatic demand reduction on the demand side have all contributed as buffers.

Greg Calnon, Head of Global Public Markets Investing at Goldman Sachs Asset Management, told Bloomberg TV that despite a prolonged blockade of the Strait of Hormuz, investors currently expect energy supply order to return to calm relatively quickly. However, if the disruption in the strait continues to spread, it could still lead to more severe economic consequences.

Corporate Earnings Inject a Boost into the Market

Robust earnings have provided a crucial foundation for the rebound. According to Bloomberg data, nearly 80% of S&P 500 companies that have reported Q1 earnings so far have exceeded analyst expectations. Several brokerages have raised their full-year profit growth forecasts, and analysts have generally become more optimistic about fundamentals.

AI Trading Makes a Comeback

Technology stocks are the main engine of this round of market rebound; solid artificial intelligence demand has enabled relevant companies to demonstrate strong earnings resilience in the context of war. SK Hynix reported a fivefold jump in quarterly profits last Thursday, and the Korean memory chip giant also reiterated plans to increase capital spending. Previously, TSMC had raised its 2026 revenue outlook, while Samsung Electronics reported an eightfold increase in quarterly profits.

Analysts note that the upcoming earnings and spending plans to be announced by hyperscale cloud computing companies will be key catalysts for further stock market gains.

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