Seth R Freeman on why global markets continue to climb amid West Asia conflict

Global markets are once again displaying a remarkable ability to look beyond geopolitical uncertainty. Even as tensions involving the United States, Iran, and Israel continue to dominate headlines, investor sentiment across Wall Street and parts of Asia has turned sharply positive, supported by strong corporate earnings and continued enthusiasm around artificial intelligence-driven growth.

Speaking to ET Now, market expert Seth R Freeman from GlassRatner Advisory said the geopolitical situation remains fluid and difficult to predict, especially after the United States crossed the 60-day timeline that would ordinarily require congressional approval for military action.

“Well, we have passed the 60-day deadline that the president needed to go to Congress and get a declaration of war. So technically, the war has stopped — at least that is the message coming out of Washington,” Freeman said.

He added that the current environment remains a standoff, with Iran continuing to hold significant leverage because of its strategic control over the Strait of Hormuz, one of the world’s most critical oil transit routes.

“It is extremely hard to answer how long this is going to take,” Freeman noted. “The problem here is that we have trained the Iranian regime to believe it has a lot of leverage with the Strait of Hormuz.”

No Clear Timeline for Resolution
While reports from Axios suggested that the United States and Iran may be nearing some form of diplomatic understanding, conflicting signals from former US President Donald Trump have kept uncertainty alive in the market.
Freeman pointed out that there is currently no firm deadline for negotiations to conclude.“Trump has now set no specific deadline,” he said. “There is a lot of reporting that there is an artificial timeline because he is planning to meet President Xi of China very soon, and I am sure he would like to avoid discussing this issue during that meeting.”

According to Freeman, the conflict has already complicated diplomatic schedules, with planned engagements reportedly delayed because of the outbreak of hostilities. He also questioned the effectiveness of efforts aimed at reducing Iran’s oil revenues through restrictions and shipping-related pressure tactics.

“This idea of blockading ships and trying to reduce Iran’s oil revenue does not seem to be working,” he said.

Markets Betting on Stability
Despite persistent geopolitical risks and concerns over oil prices, equity markets have shown surprising resilience. Investors appear increasingly confident that the situation may not escalate into a prolonged disruption severe enough to derail economic growth or corporate profitability.

Freeman observed that market participants are focusing more on earnings momentum than on geopolitical headlines.

“Who would imagine that with all of this volatility — war, oil concerns, and expectations of higher inflation — there is still significant confidence in future earnings?” he said.

He pointed to strong gains in US benchmark indices, with the S&P 500 and Nasdaq continuing to advance on optimism surrounding technology and AI-linked companies.

“At the same time, though, consumer sentiment is at an all-time low,” Freeman added. “So, it is rather confusing in terms of reading the tea leaves.”

The divergence between buoyant stock markets and weak consumer confidence highlights the unusual structure of the current rally. Institutional investors, pension funds, and retirement-linked investments continue to support index performance, even as broader economic concerns linger beneath the surface.

Earnings Season Delivers Positive Surprise
Corporate earnings have played a major role in sustaining the rally. Large financial institutions have posted particularly strong numbers, benefiting from elevated market volatility and higher trading activity.

“The big financial services companies and the big banks have done fabulously because they make money on trading volume,” Freeman explained. “It really does not matter whether prices are going up or down as long as there is a lot of buying and selling.”

Beyond financials, artificial intelligence remains one of the biggest market drivers, with technology and hardware companies continuing to attract investor attention. However, Freeman also noted that gains are no longer limited to just a handful of AI-focused names.

“Some of the older, more mainstream companies in the Dow also performed quite well,” he said. “So, it seems to be broad-based.”

Still, not every sector is participating equally in the rally. Healthcare stocks, according to Freeman, continue to face pressure, while automobile companies could struggle if elevated crude oil prices persist for an extended period.

“I am not sure what is going to happen with automobiles if we continue to have sustained high oil prices,” he said.

As geopolitical negotiations continue in the background, financial markets appear determined to focus on earnings growth and liquidity. Whether that optimism proves durable may ultimately depend on how quickly diplomacy catches up with investor expectations.