Global stocks rise to pre-war levels…temporary optimism or a return to life?
Global stocks have recovered their losses resulting from the Iranian war, with major indices currently trading at or above pre-war levels, as investors rush to cancel geopolitical risk premiums and refocus on the artificial intelligence boom.
Sudden recovery
The index recorded "MSCI" Global, which measures the performance of more than 1,000 large-cap and mid-cap stocks in developed markets to a new record high, now nearly 2% above its level on March 2; The first trading day after the start of the conflict.
This index had decreased by 3.29% in the week following the outbreak of War in the Middle East. However, in recent days, this sharp recovery has surprised some market watchers given that the struggle is still ongoing.
Risk premia decline
said Billy Leung, investment strategist at "Global X ETFs": "This recovery is due to the rapid decline in the war risk premium that prevailed in equity, oil and dollar markets at the height of the conflict, rather than to a fundamental reset."
He added that as soon as signs of a ceasefire appeared, "The defensive posture that had prevailed for weeks was quickly reversed, and this change in situation played a major role in this transformation"
An expected breakthrough
In fact, markets appear to have quickly shifted from pricing in worst-case scenarios of disruption, including a prolonged closure of the Strait of Hormuz, to anticipating a more stable outcome in the form of the return of Energy flows normalized and diplomacy succeeded.
Apart from market dynamics, investors were relieved by the macroeconomic situation, which was better than expected. US labor market indicators showed a slight decline, and expectations of an interest rate cut by the Federal Reserve later this year remain valid, according to sector experts.
Momentum returns to the technology sector
At the same time, enthusiasm for artificial intelligence remains a strong driver for stocks, especially in markets that rely heavily on Technology.
This combination of improved morale and sustainable growth factors has prompted some to announce the return of… "optimism" To the markets.
Leong said: "Economic vitality is back!"This view was supported by veteran market strategist Ed Yardeni, who described the rally as a forward-looking bet that the struggle will be temporary, even after recent developments.
He added that investors appear more prepared. "To overcome this confrontation in the Middle East" Instead, focus on technological innovation, including artificial intelligence, robotics, and self-driving cars.
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