By Marc Jones
LONDON, June 30 (Reuters) - Investors have had to gulp down the motion-sickness tablets this year as the turmoil from the Iran war has clashed with a seemingly unstoppable boom in all things AI and otherworldly.
Global stocks are now $7 trillion higher than at the end of 2025, even though the war caused a $9 trillion drop in March, when oil shot to $120 a barrel and hopes of lower interest rates were dashed.
South Korea's stock market has surged by 100% and Elon Musk's $2 trillion SpaceX
has blasted off, but the "Magnificent Seven" tech giants are down as a set and gold has suddenly lost its shine.
Chief economic adviser at Equity Bank, Charlie Robertson, said it has been astounding, not because of what has happened, but because of what has not happened.
"We have had one of the greatest geopolitical shocks that it has been possible to imagine and it has still not undermined global markets," he said.
The MSCI All-Country World index has jumped almost 10%, or roughly $7 trillion in market capitalisation, in the first half of the year. It has also registered the best second quarter since 2020, though it paled compared with South Korea's record-breaking run.
Currency markets, meanwhile, have been gripped by the woes of the Japanese yen, which is at a 40-year low despite Tokyo spending 11.7 trillion yen ($72.25 billion) trying to prop it up.
The Nikkei has shot up almost 40%, but State Street's head of global macro strategy, Michael Metcalfe, said the yen's fate has now become a key global risk point.
"It is all about what happens to Japanese fixed-income demand if you have a crisis in the yen," he said, describing the risk that higher Japanese interest rates drive money back into Japan and trigger selloffs elsewhere.
The dollar's broader 3% rise suggests recent talk of its demise has been premature, Metcalfe added, though BofA analysts say it remains a "rent, not an own" for now.
WILD RIDE FROM DAY ONE
This year has been a wild ride, with the United States' capture of Venezuela's president and then Donald Trump's demands to take control of Greenland while issuing tariff threats to all and sundry.
January brought the biggest monthly rise in gold prices since the latter stages of the global financial crisis, but they have gone into reverse more recently.
Gold is down more than 12% in June, on track for its worst month since October 2008 and its biggest quarterly drop since 2013. To be fair, it had doubled in value since the start of last year.
Venezuelan bonds, which Caracas has not made a payment on for nine years, have soared 55% since the U.S. capture of President Nicolas Maduro, making them the world's best performers.
Major bond markets end the first half with more modest moves. U.S. and UK 10-year Treasury yields are up roughly 24 basis points (bps) while Germany's are flat and Japan's are up about 50 bps.
It has been volatile, though. Britain's borrowing costs hit their highest in decades as worries about its finances returned. U.S. 30-year yields rose to their highest since 2007 and Japan's 10-year yields struck record peaks.
'UNDERTONE OF RISK'
Most of the second-quarter stock market gains have been powered by a scorching rally in anything AI, particularly in Asian markets.
The S&P 500 is up 14% and the Nasdaq, which welcomed Musk's $2 trillion SpaceX to its ranks a few weeks ago, has gained 20%.
There are some notable exceptions. Every one of the "Magnificent Seven" tech giants has underperformed the MSCI world index and the Bank for International Settlements has just warned that disappointing AI returns could trigger major strife in global markets.
The second half of the year looks like being lively, too. Britain's markets nervously await a new prime minister, the yen remains fragile, new Federal Reserve chief Kevin Warsh is sounding hawkish and Trump is revving up for November's U.S. midterms.
Equity Bank's Robertson worries that a blizzard of coming IPOs could mark "peak AI" before the end of the year, while Standard Chartered's managing director of debt capital markets, Patrick Dupont-Liot, senses an "undertone of risk".
"None of us has a crystal ball, we don't know what's going to really happen, but we do know that Trump has not ceased to surprise us since he has come into office," Dupont-Liot said.
(Reporting by Marc JonesAdditional reporting by Dhara RanasingheEditing by David Goodman)
