Earnings reports and Japan’s election outcome set the tone for Monday’s markets

Global markets on Monday are likely to be driven mainly by a new wave of U.S. corporate earnings and political developments in Japan, with investors watching both as signals for how long the current rally can last. First, quarterly earnings reports from several large, diversified U.S. companies before the market opens will help set the tone for the S&P 500 and broader global risk appetite. Because the recent rally has broadened beyond mega-cap technology into most major sectors, investors will focus less on any single company and more on what management teams say about demand, costs, and their outlook for 2026. Strong profits and upbeat guidance would reinforce confidence that the economic backdrop remains solid, supporting further gains in U.S. and global equities. However, any signs of slowing demand, margin pressure, or cautious forecasts could trigger profit-taking after recent record highs, potentially weighing on global indices. Second, the outcome of Japan’s snap election will be closely watched as a key political risk event. A clear win for the incumbent government would likely be seen as a sign of policy continuity and stability, which could lift the Nikkei 225 and support broader risk sentiment in Asia and beyond. A surprise or messy result, by contrast, could increase uncertainty, push investors toward safe-haven assets such as the yen and gold, and dampen risk appetite in global equities. Finally, lingering uncertainty around U.S. fiscal policy and delayed government economic data means markets will lean even more heavily on corporate earnings commentary as a real-time read on the economy. With traditional macro data arriving late or incomplete, what companies report about orders, pricing power, and cost trends will be used as a proxy for overall economic health, influencing expectations for growth and central bank policy and, in turn, global stock market direction on Monday.