Market Commentary 3rd Quarter 2026
In the third quarter, the conflict in the Middle East remained a major headwind for the global economy. In July, the US announced that the memorandum of understanding with Iran was no longer in effect. The resulting rise in energy prices and continued uncertainty weighed on businesses and households. Nevertheless, the global economy remained broadly resilient, although developments varied across regions.
In the US, GDP grew at an annualized rate of 2.2% in the second quarter according to revised data, down from 2.5% in the first quarter. Private consumption and business investment supported economic activity, while net trade was a drag due to sharply higher imports. Job growth slowed to 29,000 in September from a revised 133,000 in August. The unemployment rate edged up from 4.1% to 4.2%.
The euro area economy proved more resilient than expected despite higher energy costs. GDP expanded by 0.6% following a weak first quarter and was 1.2% higher than a year earlier. Public spending on infrastructure and defense supported industry, while services recovered on the back of improved consumer sentiment. The labor market remained robust. Growth in Switzerland was also strong in the second quarter. The chemicals and pharmaceuticals sector made an unusually large contribution following weak and partly negative previous quarters. Domestic demand also strengthened. For the full year, the Swiss National Bank (SNB) now expects growth of 1.5–2.0%.
China, by contrast, continued to be characterized by weak domestic demand. Year-on-year GDP growth slowed to 4.3% in the second quarter, its lowest level in more than three years. Despite strong exports, the prolonged property downturn, declining investment and subdued consumption continued to weigh on economic activity. The extension of the tariff truce between China and the US at the end of the quarter, together with agreed tariff reductions on selected products, should support Chinese exports. However, with the truce extended by only two months, the risk of renewed escalation remains. At the same time, China’s economy remains heavily dependent on exports.
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