The sources of the remarkable resilience of global stock markets - 4 may 2026

Despite the Iranian crisis and soaring oil prices, equity markets have once again hit record highs. Does this resilience reflect a realistic outlook or a dangerous complacency?

The resilience of global stock markets since the start of the crisis in Iran continues to astonish observers. The MSCI World Index reached a new all-time high on 17 April and has since been trading close to these peaks. Yet oil prices have risen sharply again since mid-April, dragging long-term interest rates up with them (Chart 1). How can this striking divergence between asset classes be explained?

The main explanation, of course, lies in the de‑escalation scenario adopted by the forecasting consensus. As first the OECD and then the IMF have indicated, economic models suggest that a closure of the Strait of Hormuz limited to a few months would not fundamentally undermine global growth. After a soft patch in the second and possibly also the third quarter, growth would return to its cruising speed of 3% by the end of the year.

This central scenario assumes that inflation will surge and then retreat markedly by 2027. But if that is the case, why the persistent nervousness in bond markets? Investors are probably anticipating that central banks will remain vigilant in the face of second‑round effects from the energy shock: rising food prices, services inflation, wage pressures, and so on. In addition, a post‑reopening economic rebound in the Strait of Hormuz could prevent real rates from easing during the relief phase. Markets are therefore pricing in a scenario of economic resilience with a somewhat higher inflation risk.

The second pillar of equity outperformance lies in the confirmation of the boom in investment in artificial intelligence (AI). This trend certainly raises questions about the future profitability of these investments, and about how the gains will be distributed between winners and losers, but in the short term it strengthens the resilience of global growth. The latest US figures for durable goods orders, up by 3.3% in March (excluding defence and aircraft), are striking in this respect. As in 1999/2000, the electronics component of these orders is experiencing exponential growth (Chart 2).

The stock market impact of this technological revolution goes far beyond its immediate economic effects. AI now accounts for around half of the capitalisation of the S&P 500 and more than a third of the MSCI Emerging Markets. This concentration effect mechanically amplifies the influence of this theme on overall index performance.

Moreover, the valuations of the companies most exposed to AI had corrected significantly between late October 2025 and mid March 2026, making them more attractive as safe haven stocks since the Iranian crisis. Their forward P/E ratios have returned to the levels seen before the launch of ChatGPT at the end of 2022 (Chart 3).

Beyond hopes of de‑escalation and the support from AI, the strength of equity markets rests on the exceptional profitability currently being delivered by most listed companies. This phenomenon is far from new and has even intensified in recent months.

On an equal‑weighted basis, the return on equity of the 1,150 largest companies in developed countries has reached new highs, with an upward trend since mid‑2025 (Chart 4). This prosperity goes well beyond the “Magnificent Seven” and AI: it is spreading across many sectors.

This success reflects both the resilience of the global economy and the ability of global champions to consolidate their dominant positions in almost all circumstances. The gradual adoption of AI may also be playing a role, although the impact has yet to be confirmed empirically.

Despite the Iranian crisis, the consensus among financial analysts remains resolutely optimistic for 2026, forecasting earnings per share growth of at least 10% in most regions. These figures appear very ambitious, but one factor qualifies this apparent euphoria: share prices have risen more slowly than expected earnings, which means valuations are now lower than they were before the closure of the Strait of Hormuz (Chart 5).

The Iranian crisis has therefore had an impact on equity markets, but only a modest one. From a rational standpoint, a shock regarded as temporary has no real reason to significantly depress equity valuations, since these are linked to the discounting of future profit flows over an infinite horizon. It is simply that markets have historically accustomed us to much higher – and often excessive – volatility. Moreover, the exit scenario from the crisis remains unclear, and each passing week increases the risk of broader disruptions that could lead to a recession.

This situation is reminiscent of the Covid period, when commentators fretted over investors’ appetite for equities even as entire swathes of the global economy were shutting down. The massive support provided by central banks – which is absent today – seemed to explain part of that resilience. But, as now, equity markets also benefited from both a technological boom – the digitalisation of the economy – and, above all, reopening hopes linked to the prospect of a vaccine. Today, investors are waiting for the magic key that will reopen the Strait of Hormuz. So we wait.