Market Flash of January 27, 2026
Tue Jan 27 2026
In this episode:
After one of the strongest starts to the year on record, markets are showing the first signs of a pause, without undermining the underlying message: 2026 is shaping up to be the year of broader participation and the end of extreme concentration. The outperformance of small and mid caps, the improvement in market breadth, and the quiet underperformance of mega-caps point to a deep structural shift compared with recent years. The macroeconomic backdrop remains surprisingly constructive, with twelve consecutive months of positive economic surprises and Europe benefiting from the rollout of fiscal plans, opening the door to growth exceeding expectations. At the same time, commodities are back in focus, with technical and fundamental signals suggesting a potential multi-year regime change, supported by geopolitical and strategic dynamics such as the growing importance of Greenland and critical raw materials. On the risk front, attention turns to Japan: the return of inflation, rising yields, and the implications for the global carry trade represent a potential source of systemic instability. In this environment, the earnings season will be crucial in confirming the broadening of the market, against a backdrop of elevated valuations, crowded positioning, and optimistic sentiment. The key message for 2026 remains positive but selective: markets supported by strong stimulus and structural trends such as AI, M&A activity, and corporate buybacks, but with higher volatility and a growing need for flexibility and adaptability to capture opportunities while managing risks. To learn more, listen to the latest episode of the Market Flash podcast series, curated by Alberto Tocchio, Head of Global Equity and Thematics.
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In this episode: After one of the strongest starts to the year on record, markets are showing the first signs of a pause, without undermining the underlying message: 2026 is shaping up to be the year of broader participation and the end of extreme concentration. The outperformance of small and mid caps, the improvement in market breadth, and the quiet underperformance of mega-caps point to a deep structural shift compared with recent years. The macroeconomic backdrop remains surprisingly constructive, with twelve consecutive months of positive economic surprises and Europe benefiting from the rollout of fiscal plans, opening the door to growth exceeding expectations. At the same time, commodities are back in focus, with technical and fundamental signals suggesting a potential multi-year regime change, supported by geopolitical and strategic dynamics such as the growing importance of Greenland and critical raw materials. On the risk front, attention turns to Japan: the return of inflation, rising yields, and the implications for the global carry trade represent a potential source of systemic instability. In this environment, the earnings season will be crucial in confirming the broadening of the market, against a backdrop of elevated valuations, crowded positioning, and optimistic sentiment. The key message for 2026 remains positive but selective: markets supported by strong stimulus and structural trends such as AI, M&A activity, and corporate buybacks, but with higher volatility and a growing need for flexibility and adaptability to capture opportunities while managing risks. To learn more, listen to the latest episode of the Market Flash podcast series, curated by Alberto Tocchio, Head of Global Equity and Thematics.