Speaking to ET Now, Mark Matthews from Julius Baer said markets are beginning to look beyond the uncertainty surrounding US-Iran tensions, though he cautioned that the situation remains fluid and unpredictable.
“There is a lot behind the scenes we do not see and therefore impossible to forecast, for all we know there could be missiles being fired tomorrow. But if we proceed along the path we seem to be on, then I think that the oil price will continue to go lower and the market will continue to go higher,” Matthews said.
According to him, while mainstream global newspapers remain consumed by Middle East developments, financial markets are being driven by a much larger structural theme.
“As you know much as the conflict in the Middle East dominates the headlines of newspapers like the New York Times or the Washington Post, the financial media like the Financial Times or the Wall Street Journal, it has been looking at this big artificial intelligence infrastructure story for the last few weeks, what is dominating the headlines and ultimately that explains why markets have been moving to new highs despite the conflict in the Middle East not being resolved,” he added.
Earnings Boom Becomes Market’s Main EngineMatthews believes the current rally is being fuelled primarily by extraordinary earnings growth, particularly in the technology sector.“Yes, the earnings are extraordinary and so are the forecasts for the earnings that are yet to come. It is hard to put numbers on them,” he said.Highlighting the scale of expectations building around AI infrastructure, Matthews referred to comments made by Lisa Su.
“AMD CEO Lisa Su said yesterday that she had taken her forecast for server CPU revenues from $60 billion to $120 billion four years from now,” he noted.
He also pointed to the earnings trajectory of the S&P 500, saying the numbers are significantly outperforming expectations.
“And if you look at the first quarter for the S&P 500 companies, of which about 80% have reported their first quarter results and you combine those actual results with the 20% where we are using consensus numbers, it is looking like 27% earnings growth for the S&P 500 in the first quarter,” Matthews said.
“Once again, being driven by technology, I do not need to tell you that is an extraordinarily high number and it will take the 2026 consensus forecast for S&P 500 earnings I think well above 15%,” he added.
India Still Attractive Despite Moderating GrowthOn the question of foreign investor sentiment towards India, Matthews pushed back against the perception that overseas money is consistently leaving Indian equities.
“Well, I must be getting different statistics because my impression is that foreign institutional investors have been net buyers in India so far this year. In fact, what I read is about $7 or $8 billion worth of FII buying,” he said.
He acknowledged that India’s earnings growth may not match the pace being seen in the United States, but maintained that the country continues to offer attractive long-term opportunities.
“The foreign investors should continue to be buyers of India this year despite the fact that the earnings growth in India probably would not be as strong as in the United States simply because it is still going to have decent earnings I would imagine around 12% to 15% this year,” Matthews said.
He also noted that recent market consolidation and rupee weakness have improved India’s valuation appeal for global investors.
“And, of course, the market having gone sideways has become cheaper and for foreign investors this devaluation in the rupee has also made it cheaper. I am not surprised that FIIs are buying and they will continue to,” he added.
Banks Remain Core to India Growth StoryWhile Matthews refrained from making detailed sectoral calls on India, he maintained that financial services remain central to the country’s economic trajectory.
“I would rather give you an honest answer than make something up,” he said when asked about sector preferences.
“But the banks are the heart of the economy. If the economy is improving, I would think naturally they will do well and there is still a long-term what I would call structural growth in the private banks where they are increasing their deposits at the expense of the public sector ones,” Matthews added.
US Bull Market May Be Entering “Beginning of the End”Despite remaining constructive on equities, Matthews suggested the current global bull run may be approaching its later stages, although he clarified that this does not necessarily imply an immediate peak.
“Yes, hard to know. I think we are entering the beginning of the end for this bull market. But the beginning of the end does not mean the end is close. It could be a year from now,” he said.
He believes the current cycle may continue until several highly anticipated US technology IPOs eventually hit the market.
“In fact, I think it probably will because I do not think the market will peak until these jumbo initial public offerings in the United States have been listed on the stock market there, companies like SpaceX, OpenAI, Anthropic and I do not think we will complete that until sometime in the first half of next year,” Matthews said.
He compared the current environment to the late stages of the dotcom boom.
“But in between now and then the market really could go up and especially if this conflict in the Middle East is resolved, you could get a real sugar rush, similar to 1999 if some of your viewers were looking at the dotcom era,” he observed.
“I am not calling for the S&P to double, but could we get to 10,000 on the index? Not impossible in my opinion,” he added.
China’s AI and Automation Story Diverges From EconomyMatthews also weighed in on China, arguing that the country’s equity market has historically shown little direct correlation with economic growth.
“Well, I have never felt that China’s stock market and economy are correlated simply because it had so many poor years of stock market returns when it was growing at very high rates of GDP,” he said.
He pointed to early signs of stabilisation in China’s property market, particularly in major cities such as Shanghai, Shenzhen, Guangzhou and Beijing.
However, he argued that the real market driver in China is once again artificial intelligence and technology-linked manufacturing.
“But I do not think it is the economy there that is that important for the market. It is actually the same as in America. It is very much a technology story and artificial intelligence,” Matthews said.
According to him, China’s market performance is currently highly bifurcated.
“The Hang Seng Technology Index which is the big companies Alibaba, Tencent, etc, listed in Hong Kong that is actually down over 10% so far this year. But the China index in Shenzhen that reflects these kind of companies that I just talked about that are doing automation, robotics, EV related things, AI, those are up over 10%, in fact considerably more,” he said.
As global investors continue balancing geopolitical uncertainty against the promise of AI-led growth, markets appear increasingly willing to reward earnings momentum over headline risks — at least for now.
-1024x683.jpg "Strait Outta Hormuz: Getting the Iran Oil Story Straight")
