Equities are back to all-time highs — what’s next?

In this episode of Making Sense, host Eloise Goulder is joined by JPMorgan market intelligence experts Andrew Tyler and Federico Manicardi to analyze the recent surge in global equities, with the S&P 500 surpassing all-time highs following a sharp rally over the past three weeks. The recovery is attributed to the de-escalation of Middle East tensions, particularly the reopening of the Strait of Hormuz, which had previously triggered oil price spikes and market volatility. The hosts emphasize that both macroeconomic fundamentals—strong consumer spending, low unemployment, and resilient GDP growth—and robust Q1 earnings expectations (projected at 12-13% earnings growth) are underpinning the market’s bullish momentum. Technology and financial sectors are highlighted as key leaders, with tech benefiting from AI-driven demand and attractive valuations despite recent underperformance. Internationally, Asia and emerging markets remain favored due to strong AI-related supply chains, favorable valuations, and renewed investor flows, while Europe is viewed more cautiously due to energy shocks and weaker structural inflows. The discussion also addresses critical risks, including the potential for renewed Middle East conflict, inflationary pressures from supply chain disruptions (especially in energy, fertilizers, and critical materials like helium), and the timing of these impacts expected in late May/June. For international markets, China’s economic recovery and evolving geopolitical dynamics in Europe—such as shifting odds around a Russia-Ukraine ceasefire—are seen as pivotal upside catalysts. Overall, the outlook remains cautiously optimistic, with a focus on selective sector exposure and active risk management amid ongoing global uncertainties.