Equities finished last week on firmer footing, with technology and other growth names again doing much of the heavy lifting, even as investors kept a close watch on Iran-related risks and the recent climb in oil prices. Danske Bank’s research team said the combination of stronger earnings and higher geopolitical tension left markets with an unusual mix of rising share prices and rising bond yields, a pattern that points to investors returning to a more traditional stock-and-bond relationship.

The bank said the earnings season has been strong enough to offset some of the anxiety around the Middle East, giving equities fresh support despite the uncertain backdrop. That view fits with recent commentary from market strategists at BNY, who said first-quarter S&P 500 results have been robust, although the upside relative to already elevated expectations has been limited and guidance for the rest of the year remains uneven.

Danske also said there is still downside risk if tensions in the region worsen, but the strength of corporate profits may continue to create upside for equities. The firm noted that year-to-date gains of around 6% to 7% have been driven more by earnings growth than by a simple rerating of valuations, which makes it harder for bears to argue that stocks are expensive purely on valuation grounds.

The broader picture remains one of markets trying to look through geopolitical noise while staying alert to shifts in energy prices, yields and monetary policy. Earlier this month, Danske said investors were increasingly pricing in a future de-escalation in the Middle East, while BNY and MUFG both pointed to selective leadership in semiconductors, AI-linked names and other growth-sensitive parts of the market. That suggests the rally is still being driven by a narrow set of themes, even as volatility and cross-asset correlations remain elevated.

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Source: Noah Wire Services