South Korea's equity benchmark has fallen more than 25% since its all-time high in June amid regulatory concerns and investor worries over the durability of the broader semiconductors rally. We retain a constructive view on the industry, but think selectivity is key. Investors should also ensure diversified exposure to AI.

We expect second-quarter earnings to deliver another strong set of results, with all sectors likely to report an increase in profits. Our forecast of 28% earnings growth for the S&P 500 is supported by strong AI investment, improving cyclical activity, and solid consumer spending.

Markets are on edge as renewed US-Iran tensions pushed oil prices and Treasury yields higher. Investors will now look to June CPI data and Fed Chair Kevin Warsh’s congressional testimony for clues on the path of US interest rates. We expect inflation pressures to ease in the coming months, which should ultimately lead to lower bond yields.

Continued US-Iran tensions are testing markets, but there are ways investors can consider helping portfolios navigate uncertainty while staying positioned for potential upside.

The path toward a lasting peace deal between the US and Iran is proving to be bumpy, with President Trump saying further negotiations with Tehran were a "waste of time." The most effective method to navigate near-term volatility remains diversification, in our view. But with a diplomatic solution still likely, we expect global equities to move higher, bond yields to decline, and broad commodities to stay supported.

As investors assess the next phase of the AI growth story, we believe diversifying equity exposure remains key. We expect the next leg of stock gains to be marked by a broadening of market leadership.

We remain constructive on the AI theme, but the market narrative is gradually shifting from strong near-term growth to the durability of spending beyond 2027. Investors should ensure diversification and selectivity in their exposure.

Despite the recent decline in commodity prices, we believe fundamentals should provide support in the coming months. We also believe broad commodity exposure offers diversification, inflation hedging, and downside protection in a portfolio context.

Markets are looking to June’s payrolls today for clues on the Fed’s interest rate path after Chair Kevin Warsh offered little indication. We maintain the view that current market conviction around Fed rate hikes is too aggressive and see an opportunity to add to short- and medium-maturity quality bonds.

Global equities delivered a strong performance in the second quarter, and we think the momentum can continue in the coming months. The next phase of the rally should, in our view, see a broadening of market leadership.