Global investors and the International Monetary Fund (IMF) appear aligned in their view that the Middle East war is largely over—with only verbal disputes remaining. Energy markets, however, remain uncertain and may still face significant rhetorical confrontations. Many asset prices have returned to their starting points, with markets currently viewing the conflict’s impact as marginal. The IMF’s challenging task of forecasting global growth amid the Middle East war and energy shocks has left as many questions as answers, accompanied by numerous alternative scenarios. Yet the most significant aspect of the IMF’s core conclusion may not be what it did, but what it did not do. Compared to its January update—three months before the war—the IMF made no changes to its global GDP growth forecast for 2027. Although the IMF lowered this year’s global growth expectations—which would result in a lower base effect—the organization’s outlook for next year remains consistent with projections from January and even October of last year: global GDP growth of 3.2%. Even before the IMF released these forecasts on Tuesday, many market participants had already reached similar conclusions. On Monday, U.S. stock markets recovered to their pre-war levels from February 27, completing a round-trip fluctuation of 565 points, or nearly 10%. The VIX index, a measure of implied volatility often referred to as the "fear gauge," has fallen to its lowest level since February. The MSCI World Index, which tracks global equities, has not fully returned to pre-war levels but remains only 1% below the all-time high set two months ago. Key exchange rates, such as EUR/USD, have also reverted to February levels. In recent weeks, investors have widely discussed how little the oil price shock has affected full-year corporate earnings forecasts. Driven by upward revisions in profit expectations for technology and energy companies, overall earnings growth projections for 2026 have actually increased by 2 to 3 percentage points since the war began. For 2027, earnings growth expectations for U.S. and European blue-chip stocks remain robust at 18% and 11%, respectively. Meanwhile, over the month ending in early April, the forward 12-month price-to-earnings ratios for the S&P 500 and MSCI World Index declined by more than 10%. The logic of ignoring the war, betting on eventual de-escalation, and focusing on the coming year is difficult for markets to resist. This reasoning prompted BlackRock, the world’s largest asset manager, to shift back to an overweight position in U.S. and emerging market equities this week. BlackRock believes that the impact of the Middle East war has been effectively contained, and strong corporate earnings will create a favorable environment for U.S. equities. The firm upgraded its rating on U.S. stocks from "neutral" to "overweight," noting that prospects for a lasting ceasefire have led strategists to conclude that the war’s effects will be limited. Additionally, "the threshold for renewed conflict between the U.S. and Iran remains high," further restricting potential disruptions. At the same time, corporate earnings prospects appear exceptionally bright. More importantly, tech sector profits are projected to surge 45% this year, yet the sector’s actual gains year-to-date have been minimal. Of course, not everything remains unchanged. With global oil and gas supplies still vulnerable to disruptions in the Strait of Hormuz—where the U.S. and Iran are vying for control of this critical energy transit route—near-month crude futures have risen by one-third, while prices for refined products such as jet fuel, gasoline, and diesel have soared. Natural gas and fertilizer prices also remain elevated. Interest rates and bond markets have not yet returned to pre-war levels—persistent risks of resurgent inflation and the possibility of central banks raising rates again to curb it remain. The 10-year U.S. Treasury yield is still about 30 basis points higher than February levels, and futures markets imply only a 30% probability of the Federal Reserve resuming rate cuts by year-end. Mortgage rates have risen sharply, and corporate bonds have been affected by volatility in private credit markets. A Bank of America survey this month showed global asset managers scaling back their bullish sentiment from the start of the year, with sentiment indicators falling to last summer’s subdued levels and inflation expectations climbing. Even the IMF acknowledges that the longer the Middle East energy shock persists, the more likely its "adverse scenario" becomes. Billionaire investor Ken Griffin warned on Tuesday that this is a "perilous moment," suggesting that a six- to twelve-month closure of the Strait of Hormuz could trigger a global recession. However, based on crude futures trends, this is still not the market’s base case. Brent crude futures for this year and next indicate a gradual return to normalcy. The weighted average forecast for year-end oil prices stands at $84 per barrel. Although this is still 10% to 15% above February levels, quick estimates suggest it would only reduce global GDP growth by 0.2 to 0.3 percentage points. That is not enough to shift portfolios into defensive mode—regardless of views on broader inflation or political consequences. Fewer than 10% of surveyed funds expect a recession in the near future. Although average cash levels reached a 10-month high last month, they remain well below extremes seen during last April’s tariff shock or the 2022 Russia-Ukraine conflict. These signs suggest it is not entirely market complacency—but certainly not panic-driven selling. Even as daily market attention remains focused on the conflict’s trajectory and price sensitivity wanes, a "downgrade reaction" at the market level has already begun. Whether this is premature, only time will tell.