The weakness in technology and trade tensions shape the course of the markets
26 FEB, 2026
By François Rimeu from La Française
Although equity markets have started the year on a positive trend, with most stock indices moving higher, it is worth noting some shifts in momentum.
It is impossible not to mention the sharp decline in part of the U.S. technology sector, with software companies coming under intense pressure. This underperformance is not new, but it has intensified considerably over the past two months, especially following the launch of the latest version of the Claude AI assistant. Investors are questioning the disruptive potential of different AI technologies and the consequences they could have for certain business models. However, so far, the sector’s earnings forecasts remain solid following a positive earnings season.
As a result, valuations have fallen significantly, with 12-month forward P/E ratios below 20 times earnings – levels even lower than those observed during the Covid crisis or after “Liberation Day”. We have taken advantage of these declines to increase our exposure to certain companies affected by these indiscriminate sell-offs. However, widespread uncertainty still prevents a broader move back into the sector.
Commodity markets have also risen considerably since the beginning of the year. Precious metals continue their upward trajectory despite historically high volatility, and oil prices have returned to the upper end of their 12-month range, around $70 per barrel. We maintain our positive view on gold, and even more so on gold mining equities. The factors that drove gold from $2,000 to $5,000 over the past three years – fiscal deficits and inflation uncertainty – remain very much in place. As for oil, we believe the risk is higher than at the end of last year, due to potential reductions in Russian supply following the trade agreement between the United States and India, as well as current instability in Iran and Kazakhstan.
Macroeconomic context
The macroeconomic backdrop remains favorable, with overall growth forecasts continuing to improve. This should once again lead to solid nominal growth in 2026 and, therefore, to upward corporate earnings prospects. This is a constructive environment for risk assets, especially equities, which we continue to overweight.
As for central banks, the ECB is unlikely to surprise us over the next six months; we expect it to keep monetary policy unchanged. Core inflation remains above 2% and is not expected to fall below target before the second half of the year. With resilient growth and signs of renewed economic momentum in Germany, the ECB is likely to adopt a wait-and-see approach.
The situation is less clear on the other side of the Atlantic: although we know who the next Fed Chair will be, we do not yet know how they will approach monetary policy or how they view the relationship between the Federal Reserve and the U.S. Treasury. Even so, G7 sovereign bond yields should generally remain stable, which should continue to support credit assets, driven by strong demand for yield.
Finally, it is difficult not to mention the rise in uncertainty following the U.S. Supreme Court’s decision to declare illegal the tariffs imposed under the IEEPA (International Emergency Economic Powers Act, the U.S. law that grants economic powers to the president in emergency situations). This is likely to trigger legal action, new trade agreements, and potentially greater volatility in the coming weeks.
Source of data: Bloomberg
