Global Equity Investor Insight | October 2026

Oct 28, 2026
Jeremy Richardson 80 x 80.jpg
Jeremy Richardson

An Agatha Christie Market Mystery

In this month’s update Jeremy Richardson explores three interconnected market strands – geopolitically driven energy costs, rising sovereign and corporate yields, and an ever-expanding AI CapEx cycle – that are winding tighter together and creating tension across capital markets.

Highlights

  • Three market strands, energy-driven inflation, rising yields, and the AI CapEx cycle, are becoming ever more closely wound, creating tension and stress across capital markets.
  • There are potential pathways for unwinding these narratives if geopolitical resolution lowers energy costs and eases inflation and rates, or if successful frontier LLM IPOs restore market confidence in AI business models.
  • Keeping portfolio risks well-managed and staying within areas of relative comfort may be best for positioning, avoiding undue exposure to volatility from these tightly wound narratives spinning either tighter or unravelling unpredictably.
  • Despite the uncertainty, earnings projections for next year remain relatively strong. Applications of new technologies across IT, healthcare, and industrials could underwrite earnings progression heading into 2027.

Jeremy Richardson

Hello. This is Jeremy Richardson from the RBC Global Equity team here with another update. 

A bit like an Agatha Christie novel where you have different strands of a story all coming together in the final few chapters of the book, we have three market strands which are coming together and becoming ever more closely wound up, or creating a degree of tension and stress within capital markets. The first of those is what's going on within the energy complex, driven by geopolitical events. Of course, higher energy cost is feeding through into inflation, and that is putting pressure on the second strand, which is rising yields.

Now, this is happening at a sovereign level. Interest rates for countries are actually going up. We're also seeing increasing levels of interest rate costs for individual companies as well, and that in turn is being accelerated or amplified by the third and final strand of the story, which is the ongoing AI CapEx cycle. This feels as though it's something that we've been discussing now for the last two years or so, but the size of the number is becoming ever bigger, and because a lot of this money is being borrowed, the demand for that capital is actually pushing up the price of capital elsewhere more broadly.

What happens as we head through towards the end of the calendar year into the beginning of next year is really hard to say in terms of whether or not these three narratives remain ever more and more closely wound or whether there are vectors or pathways whereby these can start to unpick themselves. One would be, perhaps, if there is resolution in terms of the geopolitical events, which would lead to a falling price of energy cost that would relieve pressure on inflation and also, thereby interest rates. Also, if we were to see successful IPOs coming to market of some of the big frontier large language models, making them very well-funded, it would also give, I think, the market a degree of confidence in the ability of these business models to sustain themselves.

In the absence of visibility, a crystal ball that gives us the answer to those particular questions, we're going to have to wait a bit, like Agatha Christie makes us wait to get to the end of the story to find out exactly whodunit, but I think, for investors, probably the best thing to do in the face of that uncertainty, and certainly how we're thinking about things at the moment, is to make sure that the risks within portfolios are well-managed, that we are not straying too far away from areas of relative comfort, so that we are not leaving ourselves exposed to undue volatility caused by either of these three narratives becoming even more closely wound up, or alternatively actually unspinning in an uncontrolled manner.

Instead, what we're trying to focus on is actually some of the positive attributes that we're seeing in terms of underlying companies themselves, where earnings projections for next year continue to be relatively strong. One of the dynamics here that we are particularly focused on and paying attention to is how the application of some of these new technologies that we're seeing at the moment, and we're thinking in particular about IT and aspects of healthcare and industrials, these can actually feed through and actually underwrite some of that earnings progression that investors should be able to enjoy towards the end of the year as we come through into 2027. I hope that's been of interest, and I look forward to catching up with you again soon.
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