Danske Research Team describes a strong global equities session driven by reduced downside risks rather than upgraded growth expectations. Easing concerns over the Iran conflict and the AI bubble compressed risk premia, lifting global equities close to a 15% year‑to‑date return. The S&P 500 logged its strongest day since April and a fresh record close, with Asian markets and futures also firmer.

Risk premia compress as fears fade

"Equity markets delivered what can best be described as an atypical, but classic 2026 risk on session yesterday rather than a traditional risk on day."

"The key driver was not an upgrade to growth expectations but a further removal of downside fears. The two dominant swing factors were reduced concerns over the Iran conflict and fading fears around the AI bubble."

"As risk premia continued to compress against a backdrop where the underlying macro and earnings picture remains exceptionally strong, equities extended their rally. Importantly, 2026 style risk on does not imply indiscriminate buying across sectors."

"Three sectors finished lower yesterday, led by Energy, while global Technology gained more than 3%. Another wave of all-time highs pushed global equities close to a 15% year to date return."

"The S&P 500 posted its strongest session since April and its first record close since June 2. Positive momentum continues this morning with gains across Asian markets alongside firmer US and European futures."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)