Equities: Narrow tech-led rally persists – Danske Bank

Danske Bank’s Danske Research Team highlights that global equities hit new highs, driven almost exclusively by energy and especially tech, while most sectors fell on Iran-related tensions and higher Oil. The team stresses that since March, global equities are up about 17% versus roughly 45% for tech, arguing that 2026 will be dominated by AI earnings growth far outpacing GDP.

AI and tech dominate global equity gains

"Global equities rose yesterday and several indices set new all-time highs, but the move was extremely narrow. Leadership came almost entirely from energy and, needless to say, tech."

"The narrow leadership was certainly not something one could blame on the macro data. Rather, renewed tensions around Iran and a 5 percent jump in oil prices was the reason that 9 out of 11 sectors were lower yesterday. However, given the strong performance in tech, large cap cyclicals outperformed while minimum volatility and defensives underperformed."

"It has become even more evident recently just how narrow equity market leadership has become. Since the end of March, global equities are up around 17 percent, but this has been driven especially by the tech sector, which globally is up close to 45 percent since the bottom. This reinforces what we have stressed many times this year, and what is becoming increasingly clear for investors across financial markets: 2026 will be a year dominated by AI and the AI buildout."

"We are seeing earnings growth that is four times what GDP growth would normally imply! From an equity and risk perspective, that means the 2026 story is AI to a much greater extent than oil, Iran, geopolitics and so on. It is more or less all about AI."

"This morning, Asian markets are somewhat in the red, led by South Korea, which is down a couple of percent. But note that South Korea's leading equity index is still up around 130 percent year to date.

"European futures are marginally higher, while US futures are in the red this morning."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)