Highlights
After a more challenging month of March, equity markets rebounded strongly in April, despite a situation in Iran that remains far from resolved.
It is tempting to conclude that markets are simply displaying complacency. However, it is also possible that we are, once again, facing the resilience paradox: a concept which, in both psychology and investing, suggests that the resilience observed does not stem from denial, but rather from an ability to adapt — and, above all, from a forward-looking perspective.
In any case, economic activity is still showing few signs of slowing, while earnings growth prospects remain solid across most sectors. To be sure, inflation bears close watching — and it is quite possible that the Fed may not cut interest rates at all in 2026 — but with the labour market broadly in balance, the risk of an inflationary spiral appears limited.
While the past six years have been marked by a succession of exceptional events, one conclusion stands out from a market perspective: equities have never waited for a return to normalcy to rebound. A simple signal pointing to a future that is not necessarily favourable, but merely less bleak — and, above all, not fatal for the economy — has generally been sufficient. Accordingly, although the outlook remains highly uncertain, we began to return to a slight overweight stance in equities at the end of April.
From a geographic standpoint, we increased our exposure to U.S. Equities, where stronger earnings growth — supported, in particular, by the technology sector — could help restore some momentum to markets in the near term.
Bottom line
While a measured approach to risk-taking remains appropriate, the resilience shown by the economy so far, combined with the recent decline in the likelihood of the most adverse geopolitical scenarios, led us to initiate, at the end of April, a first shift back toward an overweight in equities at the expense of bonds.
In the coming months, our intention is to continue this adjustment gradually, as the economic outlook becomes clearer.