Summary The war and ensuing surge in energy prices hurt confidence and risk markets. But US President Donald Trump's April 7 ceasefire announcement has sent Wall Street shares to record highs again
LONDON (Reuters) – The US-Iran ceasefire in early April appears to have revived so-called TINA ("There Is No Alternative") trades, driven by peace hopes, soaring US earnings growth and the relative insulation of the world's biggest economy to an energy shock.
Over the last year, investors, particularly in the United States, had sought out cheaper markets abroad where returns were juiced up by a weaker dollar. Enthusiasm over the AI boom and expansive government spending has also boosted equities, from Seoul and Tokyo to Frankfurt and London.
The war and ensuing surge in energy prices hurt confidence and risk markets. But US President Donald Trump's April 7 ceasefire announcement has sent Wall Street shares to record highs again.
An area chart showing cumulative net inflows and outflows in millions of dollars of global investors and US investors into US equities.
Global investors have poured a net $28 billion into US equities since the eve of the ceasefire announcement, with US investors alone accounting for nearly $23 billion of that total, according to LSEG/Lipper data.
Until that point in the year, they had pulled a net $56 billion out of US stocks, including a net outflow of almost $90 billion by US-based investors.
The ceasefire has sharpened focus on which markets have the strongest outlook, and early signals from earnings season suggest the US remains robust.
While most major equity markets have erased their war-driven losses, the S&P 500 is 2% above pre-war levels.
"We've had our fourth exogenous shock in six years and given the nature of the shock, it's not surprising that we go back to the economy that has performed the best over the very long-term, is investing the most in the short-term and is producing the best set of results," said Michael Browne, global investment strategist at the Franklin Templeton Institute in London.
One-year performance of the S&P 500
"TINA" prevailed for years as US shares climbed to record highs but suffered a setback around the January 2025 start of Trump's second term, with investors pivoting to a "TIARA" trade – "There Is A Real Alternative" – that favoured Europe and emerging markets in particular.
"I like to say there's something called 'TINA'," said Gabriel Shahin, founder of Falcon Wealth Planning, which manages roughly $1.4 billion. "Investors are looking at the resilience of the S&P and realising the engine is still humming."
The US's status as a net energy exporter, compared with European countries and others like Japan, has helped Wall Street recover more quickly from the post-war market turbulence.
Friday's announcement by Iranian Foreign Minister Abbas Araqchi that the Strait of Hormuz was open following a ceasefire accord agreed in Lebanon helped propel global stocks higher.
A ROUND TRIP ACROSS THE WORLD
Jim Caron, chief investment officer at Morgan Stanley Investment Management, which manages nearly $2 trillion, told a virtual roundtable on April 10 there had been a shift from the 2025 consensus view that European would outperform US stocks.
"We do not, any longer, think that is the case. In fact, we're taking actions in portfolios, and we're discussing this, and we're thinking about making a move towards reducing our European overweight to actually even going towards underweight Europe in favour of going overweight the US," he said.
A number of major investment banks upgraded US equities to "overweight" from "neutral" in recent days, citing resilient corporate earnings – particularly in the technology sector – that could cushion the fallout from the Middle East conflict.
First-quarter earnings so far show some sectors, such as energy and banks, have fared well, while others grapple with the impact of the war. LSEG/IBES data shows first-quarter earnings growth for S&P 500 companies is expected to be nearly 14%, while European earnings are forecast to grow by 4.2%, mostly thanks to the oil and gas sectors.
"We started the year with a more positive approach to the US than others," said Browne at the Franklin Templeton Institute. "Clearly what's happened, whether it (the war) stops tomorrow or not, is going to have more of an impact on the European and some Asian economies than it is on the US economy."
The International Monetary Fund on Tuesday shaved its 2026 US growth estimate by just one-tenth of a percentage point to 2.3%, but lowered euro zone growth estimate by 0.2 percentage points to 1.1%.
bar chart showing different assets' performance
Investors have cut exposure to popular trades such as Europe and Asian emerging markets since the ceasefire announcement.
A Bank of America weekly report on Friday, citing EPFR data, showed South Korean equity funds posted a record outflow of $2.5 billion in the week to April 15, while European stocks posted a $4.7 billion outflow, the largest since November 2024.
US equities are still showing a cumulative net outflow of $30 billion in 2026, but that is almost a quarter of what it was in mid-March, according to LSEG data.
The S&P index's burst past 7,000 this week marked a gain of more than 10% in 11 days, faster even than the bounce-back after Trump's "Liberation Day" tariff announcement in April 2025 shook global markets, according to Deutsche Bank strategist Jim Reid.
"Excluding overlaps, such rapid gains are a relatively rare occurrence, with the S&P 500 achieving a 10%+ rally in 11 sessions only 15 times this century," Reid said.
