Global stock markets return to pre-U.S.-Iran conflict levels—are they overheating?

Glonghui, April 17｜According to Nikkei Chinese, the global stock market has rebounded to levels seen before the late February US-Iran military conflict, with the US stock market leading the rally. The Nasdaq Composite Index set a new record high on April 15, the S&P 500 also reached a new high after about two and a half months, and the MSCI World Index simultaneously refreshed its peak. This round of gains was driven by multiple factors: expectations of a US-Iran ceasefire eased market concerns over rising oil prices; prior share price corrections alleviated valuation pressures, funds concentrated in AI and semiconductor sectors that are less affected by geopolitical conflict; robust Q1 earnings reports from US companies, with S&P 500 constituents’ earnings per share expected to increase by 8% year-on-year in the next twelve months, and the IMF's economic outlook of “early crisis resolution” also boosted confidence. However, the market has not fully returned to its pre-crisis state, with the current rebound showing significant structural disparity. Sectors such as consumer and raw materials face high costs and subdued supply chain pressure expectations, with short-term capital mainly chasing gains and long-term institutional investors participating less actively. Some analysts believe that oil prices remain elevated, the repair of supply chains through the Strait of Hormuz is slow, and combined with inflation and potential rate hike risks, the sustainability of this US-led global rally is in doubt, and there is a risk of an overheated correction in the short term. Going forward, attention needs to be paid to oil price declines and progress in supply chain normalization. The chief market strategist at US securities company MillerTabak sounded a note of caution about the optimistic trend, saying, “Unlike the V-shaped rebound and sustained upward trend after 2025 (following the announcement of Trump tariffs), strong rallies may not be easy to sustain.”