Global markets split as Iran conflict reshapes investor strategies
Stock markets have shown mixed reactions since the outbreak of conflict in Iran. While U.S. indices like the S&P 500 and Nasdaq 100 have climbed, European markets such as the DAX have fallen sharply. Analysts at JPMorgan now suggest that investors with a longer-term view could use recent dips to build positions.
The recovery, however, remains uneven, with only a handful of stocks driving most gains in both the U.S. and Europe. U.S. markets have held up well despite geopolitical tensions. The S&P 500 rose by 4.8% and the Nasdaq 100 surged by 10.89% since the Iran conflict began. Yet, these gains have been concentrated—just seven stocks accounted for roughly 84% of the S&P 500’s returns since early 2026.
In Europe, the picture is more fragile. The DAX dropped by 2.74%, reflecting the region’s greater exposure to the crisis. Similarly, six companies have driven over 90% of the Stoxx Europe 600’s gains, with energy firms leading the way. Meanwhile, the MSCI World Index’s rebound appears detached from rising oil prices, further highlighting the narrow nature of the rally.
JPMorgan strategists note that investor positioning remains below pre-war levels. This suggests room for broader gains if even modestly positive news emerges. They expect market leadership to shift later in the year, with value stocks, small caps, and international markets playing a bigger role.
For now, most sectors have yet to join the recovery. Only a small fraction of U.S. stocks have seen meaningful gains in recent weeks, reinforcing concerns about concentration risk. JPMorgan advises long-term investors to take advantage of pullbacks to increase exposure. The bank’s analysts foresee potential for wider market participation as conditions stabilise. Should buying constraints ease, a more balanced rally could take shape in the coming months.
