US, Japan, and South Korea Stock Indices Reach Record Highs Despite Iran War Disruptions

Stock indices in the United States, Japan and South Korea have reached new all-time highs this week, defying disruptions from the ongoing war in Iran that continue to roil global energy markets and shipping routes. The S&P 500 hit a new record high of 7,273 at the start of the week, while the NASDAQ-100 climbed to an all-time high just above 28,000 on Tuesday.

In Asia, South Korea’s Kospi soared nearly 7% to a fresh record on Wednesday, and Taiwan’s TAIEX reached a peak of 41,575.

Japan’s Nikkei 225 struck a record high of 60,909 at the end of April, capping a rapid recovery from earlier war-related declines. When the Iran war first broke out, the Kospi in South Korea fell by nearly 20% throughout the first few weeks until the end of March, and the Nikkei 225 dropped more than 14% over the same period.

Both markets faced intense pressure in the conflict's early stages amid a global sell-off, but have since rebounded fully.

The Strait of Hormuz, a critical chokepoint for energy flows, now sees an estimated 10–12 million barrels a day disrupted, with around 80% of the oil and oil products that normally transit the waterway destined for Asia. Economies like South Korea and Japan, heavily reliant on these imports, confront elevated energy risks as a result.

Oil prices have climbed to a four-year high, amplifying pressures on global trade and the real economy.

European markets show a different picture, with the EURO STOXX 50 and STOXX Europe 600 failing to reach new highs since the Iran war began. -Israeli strikes but now trade less than 10% below those peaks. S.

Even as growth forecasts for the broader economy face downward revisions. Semiconductor giants underpin much of the Asian surge, powering indices through their dominance in AI infrastructure. Alan McIntosh, Chief Investment Officer at Quilter Cheviot Europe, said the strong rise in South Korea and Taiwan has been driven by the share prices of SK Hynix and Samsung, which together represent 44% of the South Korean market, while TSMC accounts for 45% of Taiwan's market.

These companies supply essential hardware for AI development, where demand persists despite rising production costs from the Hormuz blockade. , Big Tech firms have leveraged vast capital reserves to boost AI spending, lifting major indices amid consumer inflation.

S&P 500 companies reported first-quarter earnings growth of 28%, surpassing forecasts of 13%, with the technology sector delivering the biggest positive surprises.

Russ Mould, investment director at AJ Bell, said research shows that the technology sector leads the way, with consensus forecasts pointing to 38% earnings growth this year and 25% in 2027, thanks to AI. Technical factors have also propelled the rally, as initial fears of war fallout prompted overselling.

Algorithm-driven trading firms and hedge funds took short positions in mid-March, but a market rebound forced them to cover by buying equities, creating a multi-billion-dollar short squeeze, according to research from Goldman Sachs cited by Mould.

Investors cling to expectations of a quick resolution, with McIntosh noting there is still a belief in markets that the blockade of the Strait of Hormuz will end soon as it appears to be in the interests of both sides to end this quickly. S. has been a net energy exporter since 2019, and fuel exports have spiked since the Iran war triggered worldwide shortages.

This position cushions some domestic impacts, though rising gas prices prompt questions about the balance of sending fuel overseas. Billionaire hedge fund manager Ken Griffin warned on Tuesday that energy scarcity will create the conditions for a global recession, and the United States will unquestionably feel some of that pain. S.

Data center power demand is expected to more than double by 2027, according to a new Goldman Sachs analysis. The interplay of AI expansion and energy constraints underscores the fragile optimism sustaining record equity levels for now.