A 10 percent sprint in the S&P revives 2022 flashbacks for risk aware money
A fragile ceasefire in the US-Iran war has jolted investors back into US equities and defence – just as some strategists warn markets may be underpricing geopolitical risk again.
According to Reuters, the early‑April US-Iran ceasefire has revived so‑called TINA (“There Is No Alternative”) trades, with investors crowding back into US assets on the strength of earnings and the economy’s relative insulation from an energy shock.
US President Donald Trump’s April 7 ceasefire announcement pushed Wall Street to record highs, with the S&P 500 about 2 percent above pre‑war levels.
Global investors have since added a net US$28bn to US equities, nearly US$23bn of that from US-based investors, Reuters reported, citing LSEG/Lipper data.
Earlier this year, they had pulled a net US$56bn out of US stocks, including almost US$90bn from domestic investors.
Michael Browne, global investment strategist at the Franklin Templeton Institute in London, told Reuters that after a “fourth exogenous shock in six years,” investors are reverting to the economy with the strongest long‑run record, which he said is investing heavily and “producing the best set of results.”
TINA had dominated the pre‑2025 cycle before giving way to “TIARA” – “There Is A Real Alternative” – that favoured Europe and emerging markets.
Now some managers argue the US is reasserting its lead.
Gabriel Shahin, founder of Falcon Wealth Planning, which manages about US$1.4bn, said he likes to invoke “TINA.” He said investors are watching the S&P hold up and are “realising the engine is still humming.”
LSEG/IBES data cited by Reuters shows first‑quarter S&P 500 earnings growth is expected to be nearly 14 percent, versus 4.2 percent for European companies, with Europe’s gains driven mainly by oil and gas.
The ceasefire has forced a rethink on regional bets.
Jim Caron, chief investment officer at Morgan Stanley Investment Management, which manages nearly US$2tn, told a virtual roundtable on April 10 that his team no longer believes European equities will outperform US names.
He said they are moving to reduce a European overweight and may even go underweight Europe in favour of an overweight position in the US
Reuters reported that several major investment banks have upgraded US equities to “overweight” from “neutral” in recent days, pointing to resilient earnings, especially in technology, that could cushion the impact of the Middle East conflict.
Repositioning is showing up in flows.
A Bank of America weekly report using EPFR data and cited by Reuters said South Korean equity funds posted a record US$2.5bn outflow in the week to April 15, while European stocks saw US$4.7bn in redemptions, the largest since November 2024.
US equities still show a cumulative 2026 net outflow of US$30bn, but Reuters said that is now only about a quarter of the level in mid‑March.
The speed of the move has raised questions.
Deutsche Bank strategist Jim Reid told Reuters that the S&P 500’s surge past 7,000 marked a gain of more than 10 percent in 11 days, faster than the rebound after Trump’s “Liberation Day” tariff announcement in April 2025, and that such 10 percent‑plus rallies over 11 sessions have occurred only 15 times this century.
Alongside the TINA revival, investors are leaning into defence as a long‑term theme.
The Financial Post reported that US investors are increasing exposure to the sector in anticipation of rising military budgets amid a more dangerous geopolitical environment.
Annual commitments by US public pension plans to defence‑focused private equity funds more than doubled between 2022 and 2025, while overall private equity commitments fell 2 percent, citing Dakota Marketplace.
That trend continued into this year, with defence‑focused funds seeing double‑digit first‑quarter growth in commitments as broader private equity allocations kept declining.
On public markets, US-listed defence‑focused ETFs recorded net inflows of US$4.8bn in the first quarter, up from US$283m a year earlier and small outflows two years ago.
The S&P Aerospace & Defense Select Industry index has gained 142 percent since Russia’s full‑scale invasion of Ukraine in 2022, compared with a 64 percent rise in the S&P 500.
The Post reported that Anduril Industries – a defence start‑up known for AI‑powered autonomous weapons and surveillance systems – has seen its valuation jump from US$14bn to US$60bn in the past two years.
ESG resistance has faded.
The Post said the waning influence of ESG, accelerated by the Trump administration’s assault on the theme, has reduced reluctance to back defence.
Paul O’Brien, a trustee at the Wyoming Retirement System, told the outlet that defence investment is now increasingly seen as “a social good, not a social bad.”
Some caution remains.
Rene Reyna, head of thematic and speciality ETF strategy at Invesco US, said that defence stocks “appear overvalued on a growth‑adjusted basis,” while AE Industrial Partners’ Kirk Konert warned against “just chasing the hottest deals at the highest prices.”
Despite the rally, some analysts warn that optimism over the ceasefire rests on shaky ground.
CNBC reported that the S&P 500 rose 4.5 percent last week and the Nasdaq Composite 6.8 percent as investors welcomed Tehran’s announcement that the Strait of Hormuz had reopened to shipping; the Nasdaq also logged its 13th straight winning session, a streak not seen since 1992.
That enthusiasm faded quickly.
Global equities reversed when traffic through the strait again came to a halt, with Iran closing it the day after reopening.
Matt Gertken, chief geopolitical strategist at BCA Research, told CNBC that markets are treating the crisis like Trump’s tariff “liberation day,” assuming he can raise and lower the temperature at will, even though “Iran has been attacked, and they have a higher pain threshold.”
Investment manager Orbis told the same outlet that a sustained equity recovery depends on uninterrupted energy flows through the Strait of Hormuz, which handles about 20 percent of global oil and liquefied natural gas.
Patrick O’Donnell, chief investment strategist at Orbis, said equity markets are taking a “‘glass half full’ view” and that the key question is whether the strait “is actually going to reopen again.”
Gertken also noted that Trump, whose Republican Party faces an election year, has yet to secure guarantees on Iran’s nuclear capabilities, a core war aim.
He argued that over a 12‑month horizon, investors “shouldn’t be complacent about the crisis.”
Deutsche Bank’s Jim Reid drew a direct warning from recent history.
In a note cited by CNBC, he pointed to the more‑than 10 percent S&P 500 rally in the early weeks of the Ukraine war in 2022, when hopes of a quick settlement gave way to disappointment as the index later fell about 25 percent from its January peak and finished the year down 19 percent, its worst performance since 2008. Reid called that episode “a clear warning sign.”
