Rising tensions involving Iran, the United States, and Israel could pose significant risks to the global economy and financial markets. Escalation of conflict in the region may disrupt energy supply chains, increase volatility in oil prices, and threaten critical shipping routes such as the Strait of Hormuz.

The nomination of Kevin Warsh has introduced uncertainty over US monetary policy and liquidity trends. We analyze the practicality of QT under current fiscal conditions and outline our market outlook for US stocks, China’s A-share market, and major commodities.

Global markets in 2025 were shaped more by liquidity conditions than by economic fundamentals. Entering 2026, fiscal expansion and accommodative monetary policy are expected to remain central policy tools as demand remains weak and structural risks persist.

Global growth is losing momentum as the US shutdown tightens liquidity and China faces persistent deflation. Even so, supportive policies, limited investment alternatives, and slower equity issuance continue to create conditions for a steady slow-bull trend in the market.

Market sentiment in China’s A-share market may shift in the short run but its overall outlook is determined by government policy focus, sector fundamentals, and structural economic trends.

Economic priorities in China are shifting in the second half of the year as policymakers emphasize long term structural improvements, domestic consumption, and innovation driven growth.

US fiscal policy reversal signals a move toward greater government spending and liquidity also support is likely to improve investor sentiment and drive gains in equities and other risk assets.

Global tariff negotiations continue under tense conditions, with uncertainty surrounding policy direction and trade outcomes. Investors remain cautious as markets react to evolving political and economic signals.

The worsening relationship between Europe and the United States has become a catalyst for a reassessment of Chinese and Asian markets. Investors are reacting to new geopolitical realities that may alter global asset allocation patterns.