Data source: Bloomberg. Performances in base currency.

Global equities rose sharply in Q2 2026, led by renewed optimism around AI capital expenditure and a US–Iran ceasefire that eased tensions in the Middle East.
Markets rallied as energy prices retreated from their highs, cooling inflation fears and reviving risk appetite.
This drove a decisive risk-on shift, with investors rotating back into growth and technology, and Asia ex-Japan leading global gains.

 Sources: Schroeders, Bloomberg, Yahoo Finance, JP Morgan, Reuters

In the US

• Quarter in review: US equities rose in Q2 2026, with the S&P 500 up 15.2% — its strongest quarter since 2020 — as resilient earnings, AI enthusiasm and a more comfortable inflation outlook broadened the rally beyond mega-cap technology.
• Top-performing sectors: Information technology led by a wide margin, driven by semiconductors and AI infrastructure, with communication services and consumer discretionary also solid.
• Laggards and concerns: Energy underperformed by quarter-end as the US–Iran ceasefire accelerated the fall in oil prices, while inflation and the transition to a new Fed Chair remained sources of volatility.

In the Rest of the World

• Quarter in review: Emerging markets rose sharply in Q2 2026, ending well ahead of developed markets and posting their strongest quarter since 2009, led by the technology-heavy markets of Korea and Taiwan on continued AI demand.

• Top-performing sectors: Memory and semiconductor names drove returns, with Korea and Taiwan reaching all-time highs, while smaller markets such as Hungary and Egypt also outperformed.

• Laggards and concerns: Leadership was narrow: China lagged on mixed data and internet-stock weakness, India was weighed by AI risks to its IT services, and Brazil and Indonesia underperformed on domestic pressures.

In the US

• The Fed left its target range unchanged at 3.50%–3.75%, maintaining that policy was sufficiently restrictive, with Kevin Warsh approved as Powell’s successor and chairing his first meeting in June.

• The Treasury curve flattened as stronger-than-expected data — including resilient payrolls — reinforced expectations that policy would stay restrictive.

  
  

In the Rest of the World

• The Bank of Japan raised its policy rate by 25bps to 1.00% in June — its first hike since December — and signalled further tightening was possible if inflation stayed above target. Japanese government bonds underperformed as yields pushed higher.
• Corporate bond supply stayed robust, supported by refinancing needs and AI-related capital expenditure, while firmer risk appetite supported credit more broadly.

• The USD firmed, supported by the Fed’s hawkish stance and the strength of US tech-led equities, which revived the theme of dollar-positive “US exceptionalism,” as rate expectations shifted toward higher-for-longer rather than cuts.
• The EUR eased against the dollar, slipping back from its late-winter highs even as the ECB delivered its first hike in 11 months to 2.25%, with softer inflation expectations and a weaker growth outlook capping the euro. GBP outperformed, hitting a one-year high, helped by resilient sterling assets and the swift resolution of UK political uncertainty after Keir Starmer’s resignation.
• The JPY stayed weak, touching a near 40-year low versus the dollar, as persistent yield differentials outweighed the Bank of Japan’s 25bps hike to 1.0% and kept the currency a tailwind for Japanese exporters.
• Digital assets fell sharply to pivot into the AI fever through equities — total crypto market cap down ~12.6% and Bitcoin ~14% — as a hawkish Fed, a high US dollar and renewed US–Iran tensions pulled capital out of the sector.

• Commodities fell in Q2, with the S&P GSCI index down 11.4% as the quarter’s risk-on tone played out through lower energy and precious metals prices.
• Energy led the decline as the US–Iran ceasefire pulled oil back from its highs, though shipping through the Strait of Hormuz remained well below pre-conflict levels.
• Precious metals came under pressure, with gold and silver falling as rising inflation expectations made yield-bearing assets such as government bonds relatively more attractive.
• The agriculture component was also weak over the quarter, although cocoa was a notable outperformer.
• Industrial metals were little changed, with gains in copper and zinc offsetting weakness elsewhere.

Jamie Dimon, CEO, JPMorgan Chase

“The skunk at the party … would be inflation slowly going up.”

Kevin Warsh, new Fed Chair

“This Committee will deliver price stability.”

28–29 July: FOMC Meeting

Kevin Warsh’s second meeting as Chair — policy statement only, no new projections.

What we can expect: 

With the target range at 3.50%–3.75% and inflation still elevated after the energy shock, a hold looks most likely, but markets are pricing a growing chance of a hike later in the year.

30 July: Bank of England MPC

The BoE decides with Bank Rate held at 3.75%.

What we can expect: 

The MPC has held at 3.75% all year, but two members already voted for a hike in June as energy costs keep inflation sticky (CPI 2.8%). With growth soft and a new government under Andy Burnham settling in, the Bank faces an awkward trade-off between weak activity and above-target inflation. A hold is likely, but the vote split and any shift in guidance will move gilts and sterling.

27–29 August: Jackson Hole Symposium 

The Fed’s annual symposium in Wyoming; this year’s theme is financial innovation, payments and policy.

What we can expect: 

Warsh’s first Jackson Hole as Chair, three weeks before the September dot plot, is a platform to frame his “regime change” and inflation-first stance. Investors will parse his remarks — and any divergence with the ECB, BoE and BoJ governors in attendance — for hints on whether a September move is coming.

10 September: ECB Governing Council 

Hosted by the Bundesbank, with updated staff projections.

What we can expect: 

After June’s hike to 2.25% — its first in 11 months — the ECB meets with fresh forecasts. Energy-driven inflation argues for caution, while fading eurozone growth (PMIs near contraction) argues against further tightening. Lagarde has stressed a data-dependent, no-pre-commitment approach; the new projections will show whether the Council still sees upside inflation risks.

15–16 September: FOMC Meeting 

The quarter’s marquee meeting, with a fresh dot plot.

What we can expect: 

This is the most-watched Fed meeting of Q3. In June, nine of eighteen officials signalled support for higher rates this year, and futures now price a better-than-even chance of a hike by year-end — September being the first live date. The updated projections and Warsh’s guidance will set the tone into the November midterms, when the Fed traditionally avoids surprises.

Through Q3: Geopolitics & the Strait of Hormuz 

The US–Iran ceasefire and the pace of the Strait’s reopening.

What we can expect: 

The de-escalation that drove Q2’s rally remains fragile. Oil and commodity shipping through Hormuz are still below pre-conflict levels; a durable reopening would ease energy prices and inflation, while any breakdown could push Brent higher and revive the inflation scare. It’s the swing factor for every central-bank path this quarter — and with US midterms in November and a new UK government bedding in, the political backdrop only adds to the uncertainty.