Following a multiyear love affair for investors with mega-cap, AI-driven, growth-oriented stocks, global equity markets came back down to earth in the first quarter of 2026, according to two recent reports from leading global index provider Morningstar Indexes.
In the recently published Morningstar Quarterly Style Monitor and Morningstar Factor Monitor, the authors describe a market backdrop in 2026 influenced by a combination of challenges including supply-side energy shocks, a selloff in the technology sector, growing unease with the disruptive potential of artificial intelligence, and geopolitical uncertainty headlined by a Mideast war.
According to the Style Monitor, US value index returns beat their growth counterparts by 6.79 percentage points in the first quarter. That differential was 8.15 percentage points in developed non-US markets and 3.42 percentage points in emerging markets. This value index outperformance is continuing a trend we began to see in the second half of 2025. It was a similar story in the first quarter when analyzing market factors. According to the Factor Monitor, the Morningstar Global Value Factor Index rose 2.1% in the first quarter, outperforming all seven other major market factors tracked by Morningstar Indexes.
Dan Lefkovitz — Strategist, Morningstar Indexes:
“In early 2026, investors favored stocks with more defensive characteristics, such as near-term earnings dividends, and moderate prices. Our global indexes signaled a broad-based rotation toward value-oriented stocks over their growth counterparts. The trend is consistent across global regions and market cap tiers. Could this be signaling a broadening of the global equity markets? Watch this space.”
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