Key takeaways
- Equities rise as geopolitical sentiment stabilizes
- Early earnings results point to continued strength
- China growth improves, but challenges remain
Equities push higher
The S&P 500 reached another all-time high this week, supported by easing concerns around geopolitical risk.
While U.S.-Iran talks over the weekend did not result in a formal agreement, markets appeared encouraged that negotiations are ongoing. A temporary ceasefire remains in place, helping to stabilize sentiment even as uncertainty persists.
Energy prices have also moderated from recent peaks. West Texas Intermediate crude is now trading around $90 per barrel, still elevated but below levels that would likely pose a more significant risk to U.S. economic growth.
Market gains were concentrated in specific areas. Large-cap technology stocks continued to benefit from optimism around artificial intelligence. In addition, shares of private credit managers rebounded after recent declines, as investors appeared to step in following earlier selloffs.
In our view, recent volatility in private credit has been more idiosyncratic than systemic. Much of the pressure reflects structural challenges related to liquidity rather than broader deterioration in underlying credit quality.
Outside the U.S., equity markets have not yet reached new highs but remain close, reflecting a broadly supportive global backdrop.
Read more: Private Credit vs. Public High Yield: Understanding the Tradeoffs
Earnings season starts strong
The U.S. earnings season is still in its early stages, but initial results have been encouraging.
Several large banks reported earnings above expectations. Strength has been driven more by deal activity and trading revenues, while net interest income has been less of a contributor.
Looking ahead, consensus expectations for first-quarter earnings growth stand at around 15 percent. While this is a strong starting point, it is broadly in line with the pace of earnings growth seen in recent quarters.
If realized, this level of earnings growth would support the broader economic outlook, particularly by helping to sustain employment conditions and limit layoffs.
China growth improves, but headwinds persist
China’s latest macroeconomic data provided a mixed but somewhat encouraging picture.
First-quarter GDP growth accelerated to 5 percent, indicating some improvement in economic momentum. However, underlying challenges remain. Retail sales have been relatively weak, and property prices continue to decline on a year-over-year basis.
These dynamics suggest that additional policy support may be needed for China to achieve its full-year growth target.
From an investment perspective, valuations in Chinese equities remain more attractive relative to U.S. markets. This reinforces the case for maintaining diversification across regions.
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