Global equities made further progress in the third quarter of 2026. World stock indices rose around 3% over the quarter and are now up more than 12% year-to-date, sitting just below their all-time highs. Corporate earnings continued to support markets, with S&P 500 earnings growth for the year expected to exceed 30%. AI-related investment also remained a key driver. Energy was the leading sector. Performance varied between regions: South Korea’s KOSPI eased back after a very strong run earlier in the year.
Bonds and commodities were more volatile. Ongoing tensions in the Middle East and disrupted shipping through the Strait of Hormuz pushed Brent crude up about 40% over the quarter, taking it back above $100 a barrel. Partly as a result, inflation worries returned. In September the Federal Reserve raised rates by 25 basis points to 3.75–4.00%, its first increase since July 2023. Government bond yields rose across major markets. The US 10-year yield went above 5% for the first time since 2007, and yields in Germany, France and the UK reached their highest levels in 17 to 19 years. In currencies, the yen recovered some ground after intervention in late July, while the US dollar firmed against the euro and the Swiss franc.
Looking ahead to Q4, research houses remain broadly constructive but cautious. Erste Group’s Q4 strategy expects both the Fed and the ECB to raise rates again in December, with bond yields staying around current levels and a firmer dollar. It also sees a positive outlook for equities, though with wide differences between sectors and countries. Barclays still prefers equities to bonds, but with notably less conviction than earlier in the year. It cites stock markets near record highs and rising government debt levels as reasons for caution. BlackRock continues to favour durable income from short- and medium-dated bonds and credit over long-dated government debt, and it points to bottlenecks in AI infrastructure as a key theme.
Across these outlooks, the common themes are interest rates staying higher for longer, energy prices and geopolitics remaining important variables, and continued differences in performance across regions and asset classes.
As we approach year-end, Lochburn Capital will continue to follow developments across global markets and to maintain our relationships with the professional intermediaries and industry contacts in our network. We share this commentary for general information only, as a summary of publicly available research, and it should not be read as a view on, or a reference to, any particular investment.
Disclaimer: This article is for informational purposes only and does not constitute investment, legal, tax or other advice, or a recommendation to purchase or sell any security or investment. It is intended solely for qualified professional investment intermediaries outside of the UK, USA or other restricted jurisdictions. You should not rely on this content in making any investment decision but should obtain relevant and specific professional advice. Lochburn Capital International Limited accepts no responsibility for any loss or damage arising directly or indirectly from reliance on this content.
Sources: Reuters (Q3 2026 market review, 30 Sep 2026), Federal Reserve FOMC statement (16 Sep 2026), Erste Group Research (Global Strategy 4Q 2026), Barclays Private Bank (Global Outlook), BlackRock Investment Institute (2026 Midyear Global Outlook).