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The Iran-US MOU marks a turning point for European and Japanese equities. With geopolitical risk unwinding, economic surprise indices improving, ECB policy easing, and Germany's defence spending accelerating, Europe's re-rating is underway. Japan benefits from AI supply chain breadth, the Bank of Japan's gradual policy normalisation, the resumption of trade following Middle East disruptions, and energy cost relief. WisdomTree offers compelling, cost-effective access to both opportunities.
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The Iran-US MOU marks a turning point for European and Japanese equities. With geopolitical risk unwinding, economic surprise indices improving, ECB policy easing, and Germany's defence spending accelerating, Europe's re-rating is underway. Japan benefits from AI supply chain breadth, the Bank of Japan's gradual policy normalisation, the resumption of trade following Middle East disruptions, and energy cost relief. WisdomTree offers compelling, cost-effective access to both opportunities.
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The latest rebalance of WisdomTree's Strategic Metals and Rare Earths Miners Index widens its lens from 10 to 14 metal categories, adding vanadium, silicon metal, manganese and niobium. It trims copper and lithium, lifts rare earths and nickel, tilts toward upstream mining and larger names, and now offers above-market growth at a discounted forward earnings multiple.
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European defence equities have de-rated on sentiment, not fundamentals. Q1 2026 earnings were robust with most European defence primes confirming guidance, with book-to-bill ratios averaging 1.49x. Yet the sector trades at a 41% P/E discount to US peers, offering a materially improved entry point into the European rearmament cycle.
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The Trump–Xi Beijing summit delivered managed stability, not structural change. Technology, critical minerals and Taiwan remain unresolved. For investors, two themes stand out: Western supply chain diversification in strategic metals and rare earths, and durable agricultural commodity exposure driven by food security and climate risk, not diplomacy.
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Agricultural commodities are re-rating in 2026 as two converging supply shocks — the Iran war's disruption to fertilizer flows through the Strait of Hormuz and a developing El Niño, compress production across grains, oilseeds, and softs simultaneously.
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Cotton has surged to two-year highs, driven by a structural shift from surplus to deficit, Iran-war-related polyester cost pressures, and a surge in speculative positioning. With global output falling ~4%, Chinese supply down 10%, and El Niño risk rising, the supply-demand balance is tightening materially.
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