Stock markets break records amid geopolitical turmoil, driven by strong U.S. economy

Stock markets are reaching new heights, with the Bel20, Dow Jones, and S&P 500 all setting records. This surge occurs against a backdrop of significant geopolitical turmoil, including Iran's actions in the Strait of Hormuz and the ongoing conflict in Ukraine. Despite these global tensions, the U.S. economy's robust performance is fueling the market's ascent.

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We are still looking primarily at the United States, and the economy there is doing very well.

Erik Joly, chief economist at ABN AMRO, explains that the U.S. economy is experiencing substantial growth. He notes that 70 percent of S&P 500 companies have reported their second-quarter earnings, showing remarkable profits compared to the previous year. Furthermore, 90 percent of these companies have surpassed analyst expectations, indicating strong corporate health.

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90 percent of the companies in the S&P 500 are even exceeding the expectations of analysts.

Despite economic challenges, such as rising oil prices due to the Iran conflict, consumer confidence remains high. Joly attributes this to people's belief in job security, even with the rise of artificial intelligence. This underlying confidence is a key driver for both the economy and the stock markets.

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People have confidence that they will keep their jobs in the future, even with the threat of artificial intelligence for employment.

While the sustainability of this record-breaking streak is uncertain, a potential de-escalation in the Strait of Hormuz could further boost markets by reducing inflation. However, Joly cautions that predicting such outcomes is difficult. For now, the market reflects a strong belief in the future, making it a favorable time for investors.

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That is difficult to predict.