27 Jul 2026

📈 Strong US earnings likely to offset escalating Mideast tensions

⚙️ Big Tech is likely to show strong results and clearer AI monetisation in Q2. Strong earnings upgrades are likely to drive equities higher, trumping geopolitics.

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📈 Strong US earnings likely to offset escalating Mideast tensions

  • 🗽 US earnings remain the key driver of equity market outperformance. Supported by strong AI-related demand, earnings growth in the US tech sector is projected to rise by 65.6% y/y in Q2 and 57% for 2026. Big Tech are likely to show strong results and clearer AI monetisation in Q2.
  • 🤖 Strong earnings upgrades likely to outweigh geopolitics. The tech sector has driven over half of global equity EPS upgrades since end-February, while AI adoption is still early in a multi-year cycle. We remain overweight US tech and communication services, and favour the US and Asia ex-Japan market.
  • 🛢️ Oil prices and rate expectations likely near their peak. We expect US electoral constraints and Iranian restraint (avoided attacking Saudi Arabia and UAE) to eventually limit escalation in the conflict. WTI oil prices are unlikely to remain sustainably above USD90 in the coming months and are more likely to trade within a range of USD 70–90. Hence, inflation is expected to have peaked in Q2 and the Fed is likely to keep rate unchanged for the remainder of the year.

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Capture AI-driven growth opportunities

Capture AI-driven growth opportunities