Three Market Trends Investors Should Be Watching

Global markets are shifting. Learn how China’s economy, changes in private equity, and the evolution of the traditional 60/40 portfolio could influence investors in the years ahead.

Last Edited by: LPL Research

Last Updated: July 23, 2026

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IN THIS ARTICLE:

Markets rarely move based on a single headline, but a few trends are in focus: global oil demand, the evolving private equity market, and changes in how investors build diversified portfolios. Understanding these themes can help investors make more informed decisions about long-term goals and risk.

China’s Economy Could Play a Major Role in Oil Prices

When oil prices move higher, many people assume it's because of conflicts or supply disruptions. Those factors matter, but demand matters too.

Right now, China's economy is growing more slowly than many expected. Because China is the world's largest buyer of crude oil, weaker demand there has helped offset some of the price pressure caused by tensions in the Middle East. In other words, even when supply concerns have pushed prices higher, lower demand from China has helped keep oil prices from rising even further.

This matters because oil prices affect much more than prices at the pump. They can influence inflation, interest rates, and consumer spending. Lower energy prices can help ease inflation, while higher prices can put pressure on household budgets and business costs.

Investors should keep an eye on China's economy in the coming months. If growth picks up and demand for energy increases, oil prices could rise. If demand remains weak, prices may stay relatively contained.

Private Equity Is Changing, But Opportunities Remain

Private equity involves investing in companies that are not publicly traded. These investments have delivered compelling long-term results, but the environment today looks different from what investors have experienced over the last decade.

One challenge is that many private equity firms have had a harder time selling companies and returning money to investors. As a result, investments are staying in portfolios longer than expected. Thousands of companies remain unsold across the industry, slowing the flow of cash back to investors.

The good news is that newer investments are being made at a potentially more reasonable prices than those made during the peak years of 2020 through 2022. Many industry observers believe these newer investment groups could have better long-term potential. For investors who use private equity, the lesson is to remain focused on strong manager selection and focus on managers with proven distributions.

Investors Are Rethinking the Traditional 60/40 Portfolio

For decades, many investors followed a basic approach: 60% stocks for growth and 40% bonds for stability. The strategy worked well because stocks and bonds often balanced each other out during different market conditions.

In recent years, that relationship has become less reliable. Higher inflation, changing interest rates, and global uncertainty have created periods when both stocks and bonds struggled at the same time. This has led many investors and portfolio managers to look for additional ways to diversify.

That doesn't mean the 60/40 portfolio is no longer useful. Instead, it highlights the importance of making sure your investments are built for today's market environment, not the one that existed 20 years ago. Some investors are exploring broader sources of diversification to help manage risk and create more balanced portfolios.

What This Means for You

These key market trends share a common theme that the investment landscape is evolving.

  • China's economic growth and oil demand could have a major impact on oil prices and inflation.
  • Private equity still offers potential, but investors may need to be selective.
  • Diversification remains important, and investors are increasingly looking beyond the traditional balanced portfolio model.

The goal is not to react to every headline, but to understand the bigger trends that can shape markets over time in order to make informed decisions that support your long-term financial goals.

 

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CHINA, PRIVATE EQUITY, AND PORTFOLIO FAQs

Why does China’s economy affect U.S. investors?

China is the world's second-largest economy and the largest importer of crude oil. When China's economy grows more slowly, businesses and consumers typically use less energy, which can reduce global demand for oil and other commodities. Lower demand can help keep prices in check around the world.

 

For U.S. investors, this matters because changes in commodity prices can influence inflation, interest rates, and corporate earnings. For example, lower oil prices can reduce transportation and manufacturing costs for businesses and leave consumers with more money to spend elsewhere. On the other hand, if China's economy accelerates and energy demand rises, commodity prices could increase and potentially contribute to higher inflation.

 

China's economic health can also affect global markets more broadly. As one of the world's largest consumers of goods and raw materials, shifts in Chinese demand can ripple through supply chains, trade relationships, and investor sentiment across many industries and countries. 

Private equity can still play a valuable role for suitable investors who have a long-time horizon and can tolerate less liquidity than traditional investments. Historically, private equity has generated attractive returns by investing in companies, improving operations, and increasing their value before eventually selling them. Past performance does not guarantee future results.

 

However, the market has become more challenging in recent years. Higher borrowing costs, slower deal activity, and difficulty selling portfolio companies have reduced some of the advantages investors experienced in the past. Many private equity firms are holding investments longer than expected while waiting for better conditions to sell businesses.

 

That said, newer investments may benefit from more reasonable company valuations and more disciplined deal structures. Investors who have access to private equity opportunities may want to focus on experienced managers with a strong track record of improving businesses and successfully returning capital to investors over multiple market cycles. 

The traditional 60/40 portfolio, which allocates approximately 60% to stocks and 40% to bonds, remains a widely used investment approach because it aims to balance growth potential with risk management. Stocks have historically provided long-term growth, while bonds have helped reduce volatility and generate income.

 

The challenge is that the relationship between stocks and bonds has changed at times over the last several years. Periods of higher inflation and rising interest rates have occasionally caused both asset classes to struggle simultaneously, for example, reducing some of the diversification benefits investors expected.

 

That doesn't mean investors should abandon the strategy. Instead, it highlights the importance of reviewing whether a portfolio still aligns with current market conditions, risk tolerance, and financial goals. Some investors may continue using a traditional 60/40 mix, while others may choose to add investments that provide different sources of return and diversification. The right approach depends on an investor's objectives, time horizon, and overall financial plan. 

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. ​

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. ​

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. ​

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. ​

All investing involves risk, including possible loss of principal. ​

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ​

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio. ​

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio. ​

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.​

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

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