European Markets Defy US-Iran War Uncertainty to Reach New Heights

European markets have seen a significant turnaround from their troubled state in March, when investors were wary of an energy shock from the US-Iran war. This time around, however, the economy has weathered the storm better than expected, and market sentiment is positive.

The STOXX 600 index is near record highs, with company earnings exceeding expectations and the euro reaching a three-month peak. European equities have seen a $2.44 billion inflow in the week to August 12, the largest since February 25, just before the US-Iran war broke out.

European shares have risen about 10% so far this year, compared to around 13% for the S&P 500 and MSCI's World stock index. Companies are expected to post earnings growth of 24.1% in the second quarter, their strongest growth rate in nearly four years.