Navigating Global Currents: Oakmark International's Q1 2026 Market Commentary

Well, here we are, wrapping up the first quarter of 2026, and what an interesting few months it's been in the international equity markets, wouldn't you agree? It feels like just yesterday we were bracing for the new year, full of both anticipation and, let's be honest, a fair bit of uncertainty. Looking back at Q1, we've seen a landscape that continues to shift, presenting both challenges and some really compelling opportunities for the discerning investor. Frankly, that's precisely where our team at Oakmark International tends to thrive.

Overall, international equities experienced a rather mixed, yet generally positive, performance across the board during this period. We witnessed certain sectors and regions outperforming, while others lagged a little, grappling with their own unique economic headwinds. You know, it really underscores the importance of a bottom-up, fundamental approach, rather than getting swept up in broad market sentiment. We've certainly seen continued resilience in some of the more cyclical areas, especially as global economic growth, albeit somewhat uneven, continued its slow march forward.

One of the persistent themes we've been watching, and frankly, continue to keep a very close eye on, is the ongoing dance between inflation and central bank policies. While some economies are showing signs of cooling, allowing central banks a bit more breathing room, others are still wrestling with sticky price pressures. This dynamic, as you can imagine, has a significant ripple effect on everything from bond yields to corporate earnings expectations. We've tried to position our portfolio with companies that possess strong balance sheets and pricing power, firms that can weather these monetary policy shifts with greater agility.

Geopolitics, naturally, played its usual role in adding a layer of complexity. Specific regional tensions and evolving trade relationships often create short-term volatility, which, for us, can sometimes present those wonderful long-term buying opportunities. It's about seeing beyond the immediate headline, really understanding the underlying value of a business, and trusting in the long-term prospects of high-quality companies, even when the news cycle feels a bit frantic.

From a sector perspective, we continued to find compelling value in areas that might have been overlooked by the broader market. Financials, for example, especially those with strong domestic franchises and sensible lending practices, still look attractive to us. Industrials, particularly those benefiting from ongoing infrastructure spending and automation trends, also captured our attention. On the flip side, we've remained selective in areas that have perhaps run a bit too far, too fast, focusing intently on valuation discipline above all else.

As we look ahead to the rest of 2026, our conviction in our chosen companies remains high. We believe the market's current fixation on short-term narratives often creates a disconnect between a company's stock price and its intrinsic value – and that, frankly, is our sweet spot. We're cautiously optimistic, mind you, but always prepared for unexpected twists and turns. Our commitment to deep research, patience, and a long-term perspective continues to guide every single investment decision we make. We genuinely believe that staying true to our value philosophy will continue to deliver strong results for our shareholders, come what may.