Global Market Overview
According to ETO Markets analysis, US equity markets continue to push fresh record highs despite an increasingly complex macro and geopolitical backdrop.
The S&P 500 and Nasdaq both reached new highs, supported by strong corporate earnings, even as geopolitical tensions remain elevated following the rejection of Iran’s latest peace proposal. While risks persist, markets are currently prioritizing earnings resilience and liquidity conditions over geopolitical uncertainty. At the same time, movements in oil prices remain a key driver of sentiment, reinforcing the close relationship between energy markets and broader risk assets.
Earnings Strength Continues to Support Markets
Corporate earnings remain the primary pillar supporting equity markets.
Major companies delivered strong results:
- Apple rose 3.4% after reporting solid earnings
- ExxonMobil and Chevron exceeded profit expectations, benefiting from elevated oil prices
Overall, the Q1 2026 earnings season has been notably strong, with S&P 500 earnings per share rising close to 20% year-on-year. Importantly, growth has broadened beyond the technology sector, suggesting a more resilient and balanced earnings cycle.
This breadth has helped markets look through macro risks, at least in the short term.
Labour Market Shows Signs of Turning
While headline economic data remains stable, underlying labour market conditions are beginning to soften.
Recent data highlights several key trends:
- Wage growth slowed to 0.2% month-on-month and 3.5% year-on-year
- Labour force participation increased to 61.9%
- Average weekly hours remained flat
These developments suggest that labour demand is no longer tightening and may be gradually easing.
Although the unemployment rate remains steady, the composition of the data points to a late-cycle environment where demand for labour is cooling beneath the surface.
Structural Shift in Corporate Strategy
A key theme identified by ETO Markets is the shift in corporate behaviour.
Rather than signalling economic weakness alone, recent layoffs—particularly in the technology sector—reflect a broader strategic transition:
- Companies are focusing on cost efficiency
- Capital is being reallocated toward AI and higher-margin segments
- Workforce reductions are increasingly targeted rather than cyclical
Major firms including Microsoft, Amazon, and Meta have all implemented restructuring measures aimed at improving profitability.
This suggests that the current labour market adjustment is partly driven by optimisation rather than outright economic deterioration.
Manufacturing and Macro Signals Remain Mixed
On the macro front, data remains mixed.
The ISM Manufacturing PMI held steady at 52.7, indicating continued expansion. However, the employment component declined at its fastest pace in four months, reinforcing the view that underlying momentum is weakening.
At the same time:
- The Bank of Japan intervened to support the yen at 160.00
- Central banks continue to accumulate gold reserves, according to the World Gold Council
- Australia’s commodity index surged 15.7%, reflecting strong resource demand
These cross-market signals highlight a global environment that remains uneven and increasingly sensitive to policy and commodity trends.
Markets Face a Key Contradiction
The current market environment is defined by a clear contradiction:
- Corporate earnings remain strong
- Labour market conditions are softening
- Geopolitical risks are elevated
This raises a critical question for investors: how long can earnings continue to offset macro headwinds?
While markets have remained resilient so far, the sustainability of this dynamic will depend on whether weakening labour conditions begin to feed through into consumption and corporate revenues.
Outlook
Looking ahead, ETO Markets expects the US labour market to become a key driver of market direction.
Upcoming Non-Farm Payrolls data, along with JOLTS and ADP reports, will be critical in shaping expectations for:
- Economic growth
- Consumer demand
- Federal Reserve policy
If labour market weakness accelerates, markets may begin to reassess the current optimism around earnings resilience.
At the same time, geopolitical developments—particularly involving Iran—will continue to influence sentiment through the energy channel.
Trade Focus: Silver
Fundamentals
Silver continues to benefit from strong structural demand driven by the global energy transition.
As a key component in solar panels, electrification systems, and advanced electronics, silver demand is closely tied to long-term shifts toward renewable energy.
At the same time:
- Rising energy prices are increasing production costs
- Supply constraints are tightening
- Investment demand remains supported by macro uncertainty
This combination creates a favourable backdrop for silver over the medium term.
Technical Perspective
Following a correction from recent highs, silver is now stabilising around key support levels.
Momentum indicators are showing early signs of recovery, suggesting that downside pressure may be easing and the market could enter a consolidation phase.
Conclusion
In summary, ETO Markets highlights that global markets are currently being supported by strong earnings, even as underlying macro risks begin to build.
The key risk ahead is that:
- Labour market softness feeds into consumption
- Earnings momentum begins to slow
- Markets shift from optimism to reassessment
Until then, equities may remain supported—but increasingly vulnerable to a change in narrative.
Disclaimer
The information contained herein is for general reference only and does not constitute investment advice, a solicitation, or an offer to buy or sell any financial products. ETO Markets does not guarantee the accuracy, completeness, or timeliness of the information and shall not be liable for any losses incurred from reliance on such content.