Key themes for 3Q 2026
Rising inflation is impacting consumer demand (Guide to the Markets - EMEA page 24) as the Middle East conflict filters through to the price of energy and other goods. Yet with oil prices falling back (pg 77), and interest rates unlikely to rise materially (pgs 7 and 8), this damage to the consumer growth engine should be temporary. Moreover, the other two engines of growth – government and corporate spending – are still firing (pgs 10, 22, 33 and 56).
Although stock markets have broadly been resilient, there has been a lot of movement at the sector level as investors digested the impact of higher energy prices (pgs 45 and 49). A process of catch-up can still move markets higher. We expect bond investors to price out interest rate hikes (pg 9), which should provide further support for risk assets into year end.
Managing tech risk remains a critical exercise given the high degree of AI exposure in both the US and emerging market equity benchmarks (pgs 42, 47 and 52). The problem investors face is that we still don’t know how much AI will expand the global nominal GDP pie, nor who will extract the most profits. Given this uncertainty, investors must actively diversify across the different segments of tech, while managing the level of overall tech exposure carefully (page 63). We expect every effort to be made by the tech sector to ensure the new mega-cap initial public offerings are well received.
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