View from the markets: A critical earnings season approaches

The equity market can remain supported if earnings growth broadens beyond technology, but its near-term resilience is vulnerable to disappointing tech results.

• Third-quarter global technology earnings are forecast to double year on year, with emerging-market technology earnings expected to increase more than four-fold.
• Technology accounts for nearly two-thirds of the global increase in equity profits, while energy contributes 20%; the median earnings growth of other sectors is only 7%.
• Regional indices are similarly concentrated: Europe's expected 29% earnings gain falls to 17% excluding energy, while emerging-market earnings growth drops to 11% excluding technology.
• For 2027, energy earnings are forecast to turn negative, technology growth to moderate, and other sectors' growth to rise to 12% with a more even distribution.
• Treasury yields have fallen by more than 20 basis points from their recent peak, supporting non-tech equities, while tech hardware has sold off again, particularly in South Korea, amid high AI-related expectations.

Takeaway: The author remains positive on the medium-term outlook but expects elevated technology volatility; continued equity appreciation depends on AI investment broadening earnings growth across other sectors, especially in the US.