1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 122
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
EQUITIES
Swanzy Quarshie
Managing Director,
Equities
Shalane Lewis
Manager, Equities
Key conclusions
•
Equity performance diverged sharply in 2025 with companies tied to AI-related spending
outperforming meaningfully.
•
Structural tailwinds such as AI investment, electrification, and infrastructure spending
should support Q1 2026 performance.
•
While macro and political risks persist, we see compelling reasons for positive equities
momentum in 2026.
Global equity markets navigated a complex mix of forces in 2025 as an unprecedented wave of
AI infrastructure spending on chips, power generation, and data centers boosted GDP and
earnings growth for certain economies and sectors. This influx of AI spending was further
compounded by political events that drove promises of increased infrastructure and defense
spending in many countries, supporting other parts of the markets.
Global equity markets have performed exceptionally well, led by LatAm
52.9%
31.7%
31.1%
29.7%
17.7%
6.5%
6.3%
3.5%
2.0%
2.5%
Q4 return
LatAm
2025 return
Canada
International
Emerging Markets
U.S.
Sources: Bloomberg Finance LP, Scotia Wealth Management. Total returns as of December 31st in USD, except for Canada (CAD).
However, the strong global returns in 2025 driven by AI spending and expectations around fiscal
expansion mask some persistent macro and political headwinds that markets have had to contend
with. This is evident when the onion is peeled beyond the headline returns and evaluated at the
sector and subsector levels. The result is a K-shaped recovery in the equity markets from the
Liberation Day sell-off. The tale that this tells is one of large fortunes in certain segments of the
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