Investing.com -- Global stock markets have staged a strong recovery since late March despite the ongoing blockade of the Strait of Hormuz and elevated oil prices. In a note to clients on Tuesday, Yardeni Research explained why.

The firm notes that equity markets around the world sold off sharply after the U.S. and Israel attacked Iran on Feb. 28, but have broadly rebounded since the end of March, with many markets rising to record highs.

Yardeni acknowledges the apparent contradiction, noting the recovery is "surprising, given that many countries' economies are vulnerable to stagflation and even recessions if oil prices remain elevated and oil shortages occur."

The answer, Yardeni Research argues, lies in corporate earnings resilience and technological innovation.

Industry analysts have raised forward earnings expectations to record highs for the All Country World ex-U.S. MSCI in recent weeks.

Yardeni wrote that analysts "are either all delusional or correctly betting on the resilience of the global economy," adding that the resilience "might be partially attributable to technological innovations that are boosting profit margins worldwide."

The firm is sticking with its Go Global investment posture, first recommended in early December, which called for underweighting the U.S. and overweighting the rest of the world.

“Go Global has been outperforming Stay Home since early last year. Nonetheless, valuation multiples still remain low around the world relative to the US,” the firm wrote.

Emerging markets have led the rebound, particularly South Korea and Taiwan, which Yardeni characterized as AI plays. The firm has favored overweighting the EMXC ETF, which excludes China, noting that it "worked well this month."