“What's really driving the markets right now?”

Roger Peeters distinguishes between different time horizons when it comes to market movements: short-term geopolitical factors, medium-term AI trends, and long-term liquidity and investment cycles, which he believes carry the most weight.

May 11, 2026. FRANKFURT (pfp Advisory). It is a frequently asked question—logical in its formulation but not trivial to answer. “Why are the markets rising or falling right now?” I have deliberately chosen the vague term “right now,” because there are often simultaneous, sometimes opposing trends spanning decades, years, months, days, or hours. Of course, investors can find answers in the financial press, from bloggers, in podcasts, and in various statements by experts in the capital markets. But interpreting all these assessments is not quite so straightforward either. I’ll attempt to shed some light on the matter using the current situation as an example.

In fact, I am currently being asked more frequently by investors or in interviews what the “relevant factor” is right now, often accompanied by two specific examples: the conflict in the Middle East, or perhaps the hype surrounding artificial intelligence with all its ramifications in the industries that benefit from it or, conversely, are being disrupted by it? Or is it, after all, a function of money supply and tangible assets with an imbalance (“too much money in circulation”), which is driving up the prices of tangible assets across the board? Certainly, any analysis should begin by noting that nothing in the markets happens due to a single cause, and that every interpretation may be plausible but can never be definitively accurate.

Nevertheless, I am happy to share my personal interpretation, which I have also expressed in many conversations over the past few weeks. The appeal of the current influencing factors described lies in the fact that the listed aspects affect the markets over quite different time frames, making it easy to discern the differences between them.

Let’s start with Iran and the war, ceasefire, or even a declared end to the war—whatever we are currently experiencing. The situation is as confusing as the previous sentence, especially since the direction can shift abruptly several times a day. Just as with tariffs a year ago, the Iran issue is the dominant factor driving daily fluctuations, which likely has a lot to do with the fact that U.S. President Donald Trump is someone who is as powerful as he is impulsive. The intensity of market reactions to the “POTUS’s” posts alone is already historic. These statements—whether pointing toward de-escalation or renewed conflict—drive daily movements and, not unimportantly, headlines. As a result, these very ups and downs are very much on investors’ minds. 

I view technological progress toward artificial intelligence—along with its manifold effects on corporate business models—as a medium-term trend. For several years now, there has been a clear trend toward an (evolving) group of winners, one so strong that it is driving overall market gains. Even more overarching and long-term (in fact, almost always) are investor liquidity and sentiment. Apart from steep declines, “the market wants to go up,” and has done so more or less consistently since the 2008–09 financial crisis.

In such general upturn phases, where, viewed over the long term, downturns such as those caused by the Greek crisis (2011), COVID-19 (2020), or the invasion of Ukraine (2022) appear almost like minor blips, there are always many skeptical investors—especially during recovery phases following corrections—who refuse to acknowledge the market’s sustained upward momentum. This has been the case in recent weeks as well, during which fears over Iran have gradually been priced out of the market. The opposite is true during long downturns, such as those of 2000–2003 or the 1970s, when there is a fundamental flight from the stock market that is very difficult to break through.

In my view, long-term trends are the most sustainable and important for investors. It makes a huge difference whether, as an investor in the Japanese market, I was invested for 20-year periods from the end of 1969 through mid-November 1989 or from the end of 1989 through the end of 2009: One generation enjoyed a gain of over 440%, while the next suffered a loss of 75% (measured as of November 15 in each year). This carries significant weight and is extremely relevant, but—at least in my estimation—it doesn’t receive nearly as much attention as short-term events. Unfairly so, in my view.