Where Have U.S.-Iran Tensions Reached? JPMorgan’s Latest Analysis of Subsequent Evolution

TradingKey - Geopolitical risks have persisted since 2026, with issues such as the "U.S.-Iran conflict, oil prices, and inflation" repeatedly entering the public eye. The maneuvering in the Strait of Hormuz, sticky inflation driven by wide fluctuations in oil prices at elevated levels, and uncertainty regarding Federal Reserve monetary policy have collectively constructed the core backdrop for current global asset pricing.

Geopolitical events have also evolved from short-term shocks into a core variable spanning the entire year. Their profound impact on the energy landscape, trade systems, inflation trends, and global economic resilience continues to be repriced by the market. Looking ahead from the current juncture: how will the U.S.-Iran conflict evolve and develop?

How will the US-Iran landscape evolve moving forward?

Currently, the standoff between the U.S. and Iran in the Strait of Hormuz continues. Latest reports indicate that a U.S. official stated President Trump is dissatisfied with Iran's latest proposal, believing it fails to address the core issue of Iran's nuclear program. He further stated that the bottom line remains unchanged—Trump demands that the Strait of Hormuz, a vital oil transport waterway, must remain open and requires Iran to surrender its enriched uranium.

JPMorgan Chase also offered an assessment of the current U.S.-Iran situation: the situation is presently in a ceasefire stalemate, with expectations for a gradual de-escalation in the future. Small-scale frictions remain possible at the military level, but a recurrence of past large-scale military conflicts is unlikely.

The U.S. strategy primarily involves leveraging the blockade of the Strait of Hormuz shipping lanes to cut off the limited resources Iran needs to sustain its economy, thereby exerting pressure to severely weaken the country.

For its part, Iran is retaliating by restricting passage through the strait, betting that its resilience is greater than that of the U.S. to force concessions and reach a temporary agreement. However, such agreements fail to resolve the underlying contradictions.

In the short term, Iran faces two risky prospects: first, increasing internal pressure leading to social and governance fragmentation; and second, becoming a regional "black hole" of instability, repeating the chaos seen in Syria and Libya, with intensified power struggles exporting geopolitical instability. Meanwhile, the U.S. expectation of a "moderate and compromising" Iran is an extremely idealized and low-probability scenario.

Overall, the U.S.-Iran maneuvering will persist over the long term, the conflict is unlikely to conclude quickly, and geopolitical uncertainty will continue to prevail.

In the current landscape, which safe-haven assets in the market remain attractive?

Since the US-Iran conflict, global stock markets briefly plunged into panic but have now fully recovered. In the U.S., the Nasdaq Composite has gained 9.79% since the conflict began, while the S&P 500 has risen 4.29%.

Among emerging markets, the Nikkei 225 rose 1.81%, the South Korean KOSPI gained 6.36%, and the Taiwan Weighted Index took the lead with an 11.6% gain.

The driver behind this performance is better-than-expected earnings and optimistic outlooks from AI companies. Earnings from several AI leaders far exceeded expectations, while management provided upbeat guidance, dispelling previous concerns about an AI bubble. Consequently, risk appetite has surged, with capital rotating back into volatile technology and semiconductor sectors, serving as the primary catalyst for the indices' ascent.

JPMorgan analysis indicates that the AI industry has become the core driver for global markets hitting record highs. Technological breakthroughs from companies like Anthropic have reignited the AI bull run, with momentum spreading from hardware segments like data centers and semiconductors into small-caps, credit markets, and private equity. The firm forecasts that global data center financing needs will reach $5 trillion by 2030, and this industrial expansion will prompt continuous upward revisions to market-wide earnings estimates.

Notably, the firm stated that the earnings windfall from the AI sector has completely offset the negative impact of rising oil prices. Major global indices are now trading above pre-conflict levels. High-grade U.S. investment-grade corporate bonds have become a preferred safe-haven play, supported by robust earnings performance across all sectors, as credit spreads have consistently tightened since the conflict erupted.