Geopolitics regains control of global equities as technology returns to the lead

Overview

This report discusses the shifting dynamics of global equity markets amid geopolitical shocks, rising oil prices, and technology regaining the lead. It points out that markets rebounded sharply when Middle East tensions eased, but then pulled back due to U.S. blockade measures, higher oil prices, and stagflation concerns. From a strategy perspective, the report focuses on the value opportunity in technology after the valuation reset, as well as the rotation of capital from growth technology into value stocks, energy, infrastructure, and industrials under the HALO theme.

Core views

The core views are threefold: first, in the short term global equities are highly sensitive to Middle East developments, oil prices, and policy responses, making geopolitics an important driver of market direction. Second, the technology sector was clearly re-rated lower due to concerns about AI capex returns, intensifying competition, and terminal-value uncertainty, but its margins and ROE remain elevated, and current valuations are more attractive than both history and peers. Third, macro risks are more inflationary than directly growth-destructive, corporate earnings have not yet been materially broken, but during earnings season the market will focus on companies' comments on inflation pass-through, supply-chain disruptions, and AI strategy.

Analysis framework

The report uses a global portfolio strategy framework, combining market performance, regional and sector returns, earnings contribution, earnings revisions, style performance, sector weights, geographic exposure, and concentration to assess the leadership shift in global equities and the relative opportunity in technology. The charts cover global market performance, year-to-date regional and sector performance, 12-month rolling return contribution, 2026 EPS revisions, valuation, relative value versus growth, and the GS risk appetite indicator.

Methodology notes

• Portfolio strategyGlobal equity style and sector rotation analysis

  Use regional, sector, style, earnings, and valuation indicators to judge changes in market leadership.

  The report compares the relative performance of non-U.S. stocks, technology stocks, cyclicals, value stocks, and HALO companies or styles to explain the rotation of capital from high-valuation growth technology into value and capital-intensive assets with lower obsolescence risk.

• Risk appetiteGSRAII risk appetite indicator

  A risk appetite indicator based on cross-asset pair trades.

  The chart shows that GSRAII is based on 27 cross-asset pair trades and measured by a z-score relative to the past two years' performance, used to observe changes in market risk appetite.

• Theme investingHALO companies

  Heavy Asset, Low Obsolescence, meaning capital-intensive companies with low obsolescence risk.

  The report classifies companies in energy, infrastructure, and industrials under the HALO theme, arguing that during the technology de-rating phase capital rotated toward these sectors, which have stronger value and tangible-asset characteristics.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Global equities

  Core research object

  Strengths

  Able to rebound quickly when Middle East tensions ease; global equities rose 4% last week.

  Weaknesses

  Highly sensitive to geopolitics, oil prices, and stagflation expectations.

  Comparison

  Emerging markets outperformed in last week's rebound, rising 7%.

  Risks

  A spike in oil prices, higher rates, supply-chain disruptions, and downward earnings revisions.

• Technology sector

  Back in the lead and a value opportunity

  Strengths

  Margins and ROE remain elevated, and valuations are more attractive relative to history and peers.

  Weaknesses

  The market is concerned about AI capex returns, intensifying competition, and terminal-value uncertainty.

  Comparison

  It had been under pressure relative to value stocks and HALO companies, but the report believes the pullback has improved the opportunity.

  Risks

  AI strategy execution falling short, insufficient capex returns, and weak earnings-season guidance.

• Value stocks and HALO companies

  A beneficiary of capital rotation

  Strengths

  Benefit from capital shifting out of high-valuation technology into capital-intensive, low-obsolescence sectors such as energy, infrastructure, and industrials.

  Weaknesses

  If technology earnings are reconfirmed, capital may rotate back into growth technology.

  Comparison

  They have benefited relative to the technology sector since early 2025 amid the technology valuation reset.

  Risks

  Slower macro growth, interest-rate shocks, an oil-price reversal, and a reversal in the capex cycle.

• Oil and rates

  Macro risk transmission variables

  Strengths

  Useful as a window into geopolitical and inflationary pressure.

  Weaknesses

  Higher oil prices and rates suppress risk appetite and valuation multiples.

  Comparison

  Compared with single-stock fundamentals, the report emphasizes their impact on overall global equity sentiment and style rotation.

  Risks

  An escalation in Middle East conflict, rising stagflation concerns, and higher corporate costs.

Key data

• Global equities performance last week+4%Market sentiment improved as Middle East tensions eased.
• Emerging markets performance last week+7%Emerging markets led the global rebound.
• Pricing date2026-04-10 closeThe report states that prices are as of the Friday close on 2026-04-10.
• Report date2026-04-13The report was published at 2:36 PM BST on 2026-04-13.

Impact & implications

For investors, the report highlights two parallel threads: first, geopolitics and oil prices may continue to amplify volatility in global equities and affect earnings expectations through inflation, rates, and supply chains; second, after the technology sector's valuation reset, it could once again become the market leader if AI capex returns and earnings quality are validated by earnings reports. Value stocks and HALO companies still offer defensive and inflation-hedging characteristics, but their relative advantage may depend on rates, oil prices, and the delivery of technology earnings.

Risks

• An escalation in Middle East conflict or blockade measures that pushes oil prices even higher.
• Higher oil prices and rates fueling stagflation concerns and pressuring global equity valuations.
• AI capex returns coming in below expectations, weakening the case for technology to regain the lead.
• Companies failing to pass through inflationary pressure smoothly, squeezing margins.
• Worsening supply-chain disruptions that affect revenue recognition, costs, and earnings guidance.
• Weak company commentary during earnings season, leading to downward EPS revisions.

What to watch

• U.S. producer price index, industrial production, and Federal Reserve officials' speeches.
• UK monthly GDP, Euro area industrial production, and final inflation data for major European economies.
• Japan's April Reuters Tankan manufacturing DI.
• China's March credit, trade, and activity data, as well as Q1 GDP.
• India and Malaysia March CPI, preliminary Q1 GDP for Singapore and Malaysia, and the Monetary Authority of Singapore policy meeting.
• Company commentary during earnings season on inflation pass-through, supply-chain disruptions, and AI strategy.