Global stock indices stayed resilient during the oil shock, while valuations and risk premia moved more than headline prices. In the US, weaker prices and higher earnings expectations reduced the S&P 500 valuation multiple.<\/p>\n
The US market multiple fell to around 20x, supported by expectations of a strong Q1 corporate earnings season and an upgraded 2026 profits outlook. Earnings yields rose faster than bond yields.<\/p>\n
US real rates, based on long-term Treasury inflation-protected securities, were steady year to date at around 1.9%. As a result, the equity risk premium increased, including in some emerging markets.<\/p>\n
The article states that expected equity returns have risen, even if this is not clear from price charts alone. It also notes the piece was produced using an AI tool and checked by an editor.<\/p>\n
FXStreet Insights Team compiles selected market observations from external experts and adds material from internal and external analysts, including commercial notes.<\/p>\n
Global stock indices have shown surprising strength through the recent oil shock, but the important changes are happening underneath the surface. This resilience suggests the market has digested the negative news, presenting new opportunities for us. We believe the fundamental picture for equities has actually improved, even if price charts do not fully reflect it yet.<\/p>\n
The S&P 500’s forward price-to-earnings multiple has compressed to around 20x from over 22x late in 2025. This is happening as the Q1 2026 earnings season looks strong, with early reports showing approximately 78% of companies beating profit estimates. This blend of weaker prices and stronger expected profits makes stocks fundamentally more attractive now than they were a few months ago.<\/p>\n
Given the improved outlook for future returns, we should consider buying call options on broad market indices to capture the potential upside over the next few weeks. History shows that after initial oil price shocks, such as the one we saw in 2022, markets tend to stabilize and refocus on earnings fundamentals. This suggests a similar pattern could unfold now, rewarding bullish positions.<\/p>\n
The gap between what stocks are expected to earn versus bond yields has widened in our favor. Even with the 10-year Treasury yield sitting near 4.6%, the earnings yield on stocks provides a better premium, creating a valuation cushion. This makes selling cash-secured puts or put credit spreads on quality names a compelling strategy to generate income, as it profits from both time decay and the market’s underlying stability.<\/p>\n
Volatility has also presented a clear opportunity for traders. The VIX, which spiked above 25 in February 2026 amid fears of supply disruption, has since fallen back to a more stable range around 17. We can take advantage of this by selling volatility, assuming that the worst of the market’s panic is behind us and calmer conditions will prevail.<\/p>\n","protected":false},"excerpt":{"rendered":"
Stock indices stayed resilient amid oil shock; valuations shifted as risk premia rose, boosting expected equity returns.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45370","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45370","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45370"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45370\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45370"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45370"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45370"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}