Our equity strategist, Ole Søeberg, shares his views on market performance during Q3 2026 and looks ahead to an interesting remainder of the year.
You can access the full report via this link. A summary of the text follows below.
Q3 2026 – a modest but stable market
The MSCI World index rose 1% in EUR terms during the third quarter, bringing the year-to-date total return to 17%. Healthcare and energy led sector performance, while semiconductors and industrials experienced a weaker quarter. The rapid sector rotations seen in Q2 moderated somewhat.
Rising interest rates, yet corporate earnings hold firm
Interest rates climbed to levels not seen since the early 2000s. Normally, this puts pressure on valuations, but strong earnings growth has acted as a shock absorber for equity markets. The key risk is clear: a slowdown in earnings growth could hit share prices hard.
Earnings forecasts continue to rise
Global earnings growth for 2026 has been revised upward to over 25%, up from 14% at the start of the year. The US is expected to see 30% growth, with the technology sector surging by as much as 60%. The forecast for Europe was raised to 17%, driven in part by ASML. The outlook for 2026 now points to a total return of over 20% for the MSCI World index.
Tech earnings driving the market structurally
Aggregate earnings for the S&P 500 are projected to grow from USD 1.1 trillion in 2017 to USD 4.7 trillion by 2030, driven by the technology and communication sectors. The rest of the market is also growing steadily at 7.9% annually since 2005.
Hyperscalers making historic investments
The six largest hyperscalers are planning combined capital expenditure (capex) of nearly USD 1,000 billion annually through 2029–2030. Financing is partly sourced from credit markets, contributing to rising interest rates.
Record-high bond issuance and credit demand
Global issuance of government and corporate bonds is projected to reach USD 29 trillion in 2026. US national debt surpassed USD 40 trillion during the third quarter. Governments, corporations, and private equity firms are competing for the same pool of savings, keeping interest rates high.
Real interest rates at 20-year highs
The US 10-year real interest rate is hovering near 3%, a level not seen since the mid-2000s. A potential long-term relief valve is increased productivity driven by AI, which could boost growth and tax revenues, thereby reducing borrowing needs.
