After 45 days of conflict, equity markets will have the opportunity this week to distance themselves somewhat from geopolitical tensions as the earnings season kicks off in the United States and Europe.

The pace of reporting is set to accelerate in the coming days, with the calendar featuring results from four Dow Jones companies and 28 components of the S&P 500.

Following the mixed performances reported by Goldman Sachs, other banking heavyweights including JPMorgan Chase, Citi, and Wells Fargo will unveil their quarterly results at midday, alongside pharmaceutical giant Johnson & Johnson.

Netflix will follow on Thursday evening, providing a pulse check on the financial health of tech stars.

Corporate earnings face the oil shock test

Investors will thus begin dissecting corporate results to gain an initial understanding of the concrete impact of the war against Iran and the subsequent surge in energy prices.

According to FactSet data, earnings for S&P 500 companies are expected to have grown by an average of 12.6% in the first quarter, marking their sixth consecutive quarter of double-digit growth.

However, these performances could be overshadowed by guidance for the coming quarters and the potential impact of rising energy costs.

Some investors believe, however, that the bad news is already largely priced into market valuations and that Wall Street could trend higher during the earnings season.

The S&P 500 erases losses and nears record highs

Indeed, the S&P 500 has already recovered nearly 8% of its value since its March 30 low, suggesting that the prospect of strong earnings could pull indices out of their recent slump. So much so that the benchmark index for American fund managers is now only 1.7% away from its all-time high.

"This movement confirms that market sentiment has clearly pivoted: flows are returning after the correction, and demand is solid enough to sustain the trend in the short term," says Linh Tran, market analyst at XS.com.

While earnings will help assess the impact of the war against Iran on major U.S. groups, they will also provide reliable clues regarding the economic situation in Europe, where Old Continent companies will also face a significant test.

LVMH reported first-quarter sales yesterday evening that were in line with expectations, while remaining cautious about the "current" situation, estimating that the conflict had weighed on organic growth for the quarter by approximately 1%.

This morning, Publicis revealed organic growth of 4.5% for the first three months of the year, matching forecasts, and confirmed its targets for the full fiscal year.

However, the first true moment of truth will come tomorrow with the presentation of quarterly results from ASML, the Dutch semiconductor equipment giant.

According to Deutsche Bank data, earnings for listed European companies are expected to have grown by an average of 2% year-on-year, though the German bank believes this increase could prove better than expected, at 3%.

The diplomatic front remains under close watch

Nevertheless, the reopening of the earnings season will not completely overshadow the stakes in the Middle East, and investors continue to closely monitor the latest diplomatic developments.

On this front, investor optimism is fueled by recent statements from Donald Trump, asserting that Iran wished to reach an agreement while ruling out any possibility for Tehran to access nuclear weapons.

These remarks come in a context that remains tense after Washington announced a military blockade targeting vessels leaving Iranian ports, while Iran threatened retaliation against the port infrastructure of its Gulf neighbors following the breakdown of negotiations.

In response to these new signs of de-escalation, oil prices are recording a sharp decline. Brent crude is down 0.8% at 98.5 dollars, while WTI is down 1.7% at 97.3 dollars.

The retreat in risk aversion is not, however, penalizing safe-haven assets like the yen, up 0.1% against the dollar, gold, which is edging up 0.4% to 4,786.8 dollars an ounce, or U.S. Treasuries, whose 10-year yield is shedding two basis points to fall back below 4.30%.

The euro is gaining ground against the dollar for the fourth consecutive session, with the single currency rising 0.1% above 1.1760 against the greenback.

Among the indicators expected today are U.S. producer prices. Given that energy accounts for approximately 5% of the statistic, the sharp rise in oil prices observed last month is expected to have caused producer price acceleration beyond the 4% year-on-year threshold in March, a three-year high.