Fisher Investments Institutional Group's Q2 2026 Market Perspectives Review and Outlook1 finds a bull market entering its late stages, powered by resilient growth, broadening earnings, and a wall of worry that, outside the US, remains very much intact.
Global equities delivered their strongest quarter since the COVID rebound in Q2 2026, with the MSCI ACWI gaining 15.1% and erasing Q1's decline to bring year-to-date returns to 11.5%. The catalyst was not a peace deal, a reopened Strait of Hormuz, or any formal resolution of the Iran conflict. Markets simply moved on. Fisher Investments describes the pattern as a classic three-step process: pre-conflict saber rattling sparks volatility, fighting erupts and worst-case scenarios get priced in, and then stocks rally well before hostilities end. "Those awaiting peace missed a 15.1% Q2 rally putting markets back at all-time highs," the firm notes, adding that oil, after peaking at $138 per barrel in early April, retraced fully to pre-war levels by June 30.
The speed of that recovery unsettled many investors. Fisher calls this productive skepticism. Lingering uncertainty about Iran, muted IPO activity in Japan and Europe, cost-of-living anxiety, and shifting fears about the new Federal Reserve chair all contribute to a wall of worry that keeps sentiment from reaching dangerous extremes globally. "Though uncertainty persists," Fisher observes, "stocks don't require clarity for the bull market to continue."
Beyond AI and US Dominance
One of the report's most pointed arguments is against the narrative that AI and US Tech are the sole engines of the rally. Through Q2, US stock returns ranked 10th among 23 MSCI World nations. Japan, the Netherlands, Spain, and Italy all outperformed, many without heavy Tech exposure. Value stocks are leading large growth across global indices, and Industrials are outperforming alongside Tech. Fisher is unambiguous: "This speaks to a stealthily broad bull market."
S&P 500 earnings grew 28.8% year-over-year in Q1, against expectations of 13.1%, with Industrials and Financials each topping 20% growth. Positive earnings surprises are not confined to the US either. Japan leads global earnings growth estimates for Q2, and the MSCI World broadly shows resilient results. Composite PMIs for the US, Japan, and China topped 50 throughout the quarter, indicating private sector expansion across the three largest economies.
Sentiment, IPOs, and Late-Stage Signals
Fisher characterizes current sentiment as entering early-stage euphoria, concentrated in US Tech and AI. The SpaceX IPO, leveraged ETF proliferation, and surging margin debt in Korea are cited as warning signs of overconfidence, not imminent collapse. "Euphoria's emergence isn't a timing tool," the firm cautions. "Stocks can continue to rise in the midst of euphoria, and exiting early risks missing returns."
The data center buildout is acknowledged as a genuine structural investment, with hyperscaler capital expenditure projected to approach $3 trillion cumulatively in 2026 and 2027. Fisher flags real but non-imminent risks: rising AI token costs, NIMBYist legislative pushback against data center construction across 14 US states and multiple European jurisdictions, and the possibility of government intervention in AI. These are described as possible scenarios, not probable ones.
Political Architecture Favoring Gridlock
The report's political analysis is notably confident. Fisher expects the November 2026 US midterms to deliver greater legislative gridlock, historically a tailwind for stocks. "The midterm year's Q4, plus the next Q1 and Q2, cumulatively deliver gains 92% of the time, averaging 19.8%." The sweet spot, in Fisher's framing, is still ahead.
Internationally, UK Prime Minister Andy Burnham's early cabinet appointments, including a centrist Treasury head and a pro-business chief of staff, suggest the feared lurch to the left will prove milder than markets anticipate. Germany's modest economic reforms, Denmark's coalition gridlock, and France's evolving presidential race are all read as areas where reality is likely to exceed pessimistic expectations.
Canada and the Recession That Isn't
Fisher pushes back firmly on Canadian recession fears. While GDP contracted marginally in Q4 2025 and Q1 2026, consumer spending and imports grew, machinery investment accelerated, and April monthly GDP rose 0.5%. Canada's stock market hit a record high in mid-July. Fisher reads the USMCA non-renewal as a rescheduling of review timelines, not a termination, with the agreement intact through 2036. "For markets, 'technical recession' and USMCA uncertainty are false fears, which are always bullish."
Five Key Takeaways for Advisors and Investors
- The global bull market remains intact, but is maturing. Early euphoria in US Tech and AI is real, but widespread skepticism elsewhere limits systemic risk. Late-stage bull markets can deliver substantial returns before topping.
- Non-US and Value equities are positioned to lead. Fisher explicitly expects non-US and Value stocks to outperform from here, while US Tech and growth stocks should fare well in absolute terms but lag headline indices.
- Earnings breadth is underappreciated. Strong results across Industrials, Financials, and international markets challenge the AI-only narrative and support continued upside across sectors and geographies.
- Political gridlock is the base case. US midterms are structurally set up to produce legislative paralysis, a historically bullish condition. European political transitions are likely to prove less disruptive than feared.
- Data center risks deserve monitoring, not alarm. The AI infrastructure buildout is real and earnings-supportive near term, but regulatory and cost pressures represent a genuine tail risk if they accelerate materially.
Footnote:
1 Fisher Investments Institutional Group. "Market Perspectives: Review and Outlook, Second Quarter 2026." Fisher Investments, 13 July 2026, https://www.fisherinvestments.com/en-us/insights/institutional-investing/global-market-outlook-and-review-q2-2026.
