Global overview
Valuation trend
Throughout Q2 2026, global valuations remained broadly resilient despite elevated market volatility and shifting macroeconomic expectations. The escalation of geopolitical tensions in the Middle East during the quarter, coupled with persistent inflationary pressures, tempered earlier optimism around monetary policy easing.
Although markets experienced periods of heightened uncertainty, resilient corporate earnings and continued investment in technology and AI infrastructure helped support valuations. Investors remained increasingly selective, favouring high-quality assets and businesses with strong fundamentals amid a prolonged higher-rate environment.
Regulatory change
Regulatory focus during Q2 2026 remained centered on valuation governance, liquidity risk management, and transparency across financial markets.
The European Securities and Markets Authority (ESMA) continued to strengthen guidance on valuation processes and liquidity stress testing for illiquid assets. Meanwhile, the European Central Bank (ECB) and the European Banking Authority (EBA) reiterated expectations for robust valuation controls, prudent risk management, and consistent application of fair value methodologies amid ongoing market uncertainty.
Market movement
Global equity markets delivered mixed performance in the quarter as investors weighed in on volatile environment due to geopolitical uncertainty and refined expectations by the central banks. U.S. equities outperformed compared to Q1 due to strong earnings in the technology sector, while European markets remained subdued amid weaker growth.
Investor sentiment improved as Middle East tensions eased, though demand remained focused on defensive sectors, including quality, infrastructure, and energy.
Economic indicator
Macroeconomic conditions remained resilient in Q2 despite ongoing external headwinds. Inflation eased gradually but stayed above central bank targets, while labour markets remained strong.
Geopolitical tensions, including the Middle east conflict, caused temporary market volatility, though concerns remained as supply disruptions sustained.
Central banks maintained a cautious, data-driven stance as markets reassessed the timing and pace of policy easing.
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