According to the Danske Research Team, global equity markets advanced last week, with a pronounced divergence emerging between regions and sectors. The S&P 500, Nasdaq, and Nikkei 225 all reached new highs, highlighting the strong performance of US and Asian markets, particularly in the technology sector. Asian markets, especially South Korea and Taiwan, continued to outperform, driven by robust technology momentum [1].
The report notes that strong earnings and higher oil prices were key drivers, boosting technology and energy stocks and benefitting US markets the most. In contrast, European equities lagged behind, trading roughly sideways, as macroeconomic data increasingly suggest that Europe is suffering more from the war in Iran than the US [1].
Previously, markets had moved in a broad risk-on or risk-off fashion based on developments around the war in Iran. However, last week marked a shift to a more divergent market environment, with sector and regional performance varying significantly [1].
The outperformance of technology and energy sectors in the US and Asia, compared to Europe's stagnation, underscores the impact of both earnings momentum and geopolitical factors on global equity markets [1].
CONCLUSION
US and Asian equity markets, led by technology and energy sectors, have outpaced Europe, which continues to lag amid geopolitical and macroeconomic pressures. The divergence signals a shift from broad market moves to more sector- and region-specific trends, with the US and Asia currently holding the advantage.