Will markets remain resilient?
Global equities have risen an annualized 11% since 2020 despite repeated shocks, as resilient growth and earnings have helped markets recover from periods of volatility. While the U.S.-Iran conflict poses near-term inflation and growth risks, markets remain constructive as earnings expectations continue to improve.
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Published on 12 May 2026
Since 2020, global equities have delivered strong gains of an annualized 11% even after absorbing a series of shocks, including the pandemic, the Russia-Ukraine war, inflation spikes, aggressive central bank rate hikes, and tariffs. Each of these events drove volatility and selloffs, but markets repeatedly recovered as growth proved more durable than anticipated and investors continued to look through near-term turbulence.
Now, with the U.S. entangled in conflict with Iran, investors face a geopolitical shock that could push energy prices higher, reignite inflation and weigh on global growth in the near term. Even so, markets appear to be pricing this as a temporary event rather than the start of something associated with a longer downturn.
In the U.S., resilient economic growth and stronger-than-expected earnings are supporting higher equity prices this year despite these risks. A renewed inflation wave or disappointing returns on AI-related capital spending could still pressure profits and growth, but for now, earnings expectations are increasing. As a result, we believe risk sentiment in the U.S. and globally remain constructive.
935825 Exp : 12 May 2027
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Stocks, as measured by the S&P 500, are up over 13% through early August. The solid gains have been fueled by a resilient economy, steady consumer spending, optimism around artificial intelligence and better-than-expected earnings growth. Still, some investors worry the advance may be too concentrated in technology and that AI-capex monetization may fall short of expectations. A closer look suggests that it is not just tech moving the market higher.
