Sunday marks 100 days since the war in the Middle East began, with the conflict continuing to drive substantial volatility across all asset classes globally as a lasting peace deal remains elusive [1]. Negotiations between the U.S. and Iran have stagnated, with both sides sending mixed messages on the state of peace talks and periodically exchanging military attacks, though a fragile ceasefire is currently in place to allow for diplomacy [1].
In the immediate aftermath of the U.S. and Israel's initial strikes against Iran, global stocks sold off. However, Wall Street's major averages have since wiped out their initial losses, with the S&P 500 reaching new all-time highs despite ongoing war, higher oil prices, and inflation concerns [1]. According to Iain Barnes, chief investment officer at Netwealth, equity markets have been influenced by the assumption that the war could push major energy-importing economies from a 'benign disinflationary environment' into stagflation, but optimism over AI's disruptive potential and a profitable backdrop for U.S. companies have also supported markets [1].
Toni Meadows, head of investment at BRI Wealth Management, noted that spending on AI infrastructure has fueled the share prices of semiconductor stocks, benefiting markets and economies like South Korea and Taiwan, which are receiving growth upgrades as a result [1]. Meadows also highlighted that the U.S., being largely self-sufficient in oil, faces less immediate pressure from the conflict in the Gulf. He cautioned, however, that if the Strait of Hormuz remains closed, inflation is likely to rise, though investors currently believe neither Trump nor the Iranians want to prolong the conflict [1]. Meadows warned that if the conflict remains unresolved, it could eventually lead to demand destruction that investors cannot ignore, but for now, positive news for AI-related companies is outweighing uncertainty in other sectors such as consumer stocks [1].
Government bonds have also experienced volatility since the war began, with yields on sovereign debt spiking as markets react to ongoing uncertainty [1].
CONCLUSION
Despite the ongoing Iran war and its impact on global markets, Wall Street has rebounded strongly, driven by optimism in AI and U.S. corporate profitability. While certain sectors and regions remain pressured by higher energy costs and bond market volatility, investors are currently focused on positive growth stories, particularly in technology and semiconductor stocks.