For financial markets, the war in Iran and the energy shock that ensued might as well be over. Since March 30, the benchmark S&P 500 equity index has surged 12.5 per cent, exceeding the record high reached on January 27. Global shares have also bounced back sharply. The MSCI All-Country World Index ex US, a gauge of international stocks that excludes the United States, is less than 4 per cent below its all-time high on February 25.

Several factors are at play. Most investors evidently believe the worst of the war is over. Neither the US nor Iran has much appetite for resuming large-scale hostilities. Citadel Securities said the most likely outcome is a deal that is “less of a comprehensive agreement and more of a freezing arrangement designed to buy time, reduce immediate escalation risk and stabilise oil markets without resolving the underlying dispute”.

Another key factor is strong growth in corporate earnings. According to Societe Generale, global stocks’ projected earnings per share this year are 12 per cent higher than at the start of this year, “the largest upward revision on record outside of a post-recession recovery”.

Much of the increase is attributable to the semiconductor and technology hardware sectors. While divergent views on the risks posed by the boom in artificial intelligence have unnerved stock markets, investors are increasingly bullish on semiconductor stocks. Chipmakers are seen as the immediate beneficiaries of the AI boom as the global buildout of data centres fuels demand for memory chips.

That the rally is particularly pronounced in parts of Asia – the region most exposed to the energy crisis given its heavy reliance on imports of oil, gas and refined petroleum products from the Middle East – shows the degree to which the war is no longer the chief determinant of sentiment.

Since March 31, the MSCI All Country Asia-Pacific Index has risen nearly 14 per cent, leaving it just 1.5 per cent shy of its all-time high on February 27. The rebound is all the more striking given mounting concerns about the economic fallout from the energy crisis.