The past week in the stock market has been marked by volatility, influenced by geopolitical events, corporate earnings reports and sector-specific developments.
As global thematic investors, we are often asked how we engage with these changes across our strategies. While the market backdrop, daily, weekly, monthly or even yearly is out of our control (unfortunately!) we track these shifts in two key ways. First, we analyse portfolio performance to understand why specific stocks, funds, themes, and assets have performed as they have. Secondly, we assess whether certain developments are likely to be structural in nature—posing a fundamental risk to investor returns either by holding certain assets or by lacking exposure to them.
Market-moving news, like we’ve seen over the last week, can have conflicting impacts across holdings, affecting certain sectors and not others, or simply weighing on markets across the board if sentiment is negative. Below are a few recent examples of the resultant impact on our key themes; such as consumption, healthcare, technology and emerging markets.
Perhaps the most well-publicised incident to impact markets was the contentious meeting between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky. The confrontation stemmed from disagreements over U.S. support for Ukraine and demands for concessions to Russia, leading to concerns about the stability of U.S.-Ukraine relations.
This incident raised alarm bells among investors about potential geopolitical risks when, arguably, prior to last week there was a sense of optimism regarding steps forward since the escalation in 2022.
Although this news isn’t tied to any one particular sector, its significance – spanning key economic powers and suggesting the potential of heightened conflict and continued war, either physical or through trade – causes confusion and uncertainty across markets. This uncertainty weighs on overall market sentiment and saw investors flock to safety.
Aside from the headline picture, news per theme was mixed, with some bright spots underneath the uncertainty.
Consumption
Within consumption, consumer staples stocks performed as you would expect and demonstrated resilience, providing some stability in a period of higher volatility. On the other hand, consumer discretionary stocks faced challenges as major retailers reported cautious outlooks. Walmart, a stalwart of US consumption, issued softer-than-expected guidance for 2025, reflecting concerns over consumer spending amid economic uncertainties, which could impact their profitability in the coming quarters. This had a knock-on effect to other businesses in the sector.
Healthcare
The broader sector faced pressure due to ongoing debates over healthcare policies and pricing regulations, which continue to create an uncertain environment for investors. That said, it also benefitted (as above) from volatility in other areas as it’s typically viewed as a defensive sector. Similarly, last week also saw the much-anticipated earnings report from Eli Lilly's, one of the ‘Mag 2’ within healthcare. Earnings were positive and the stock rose following the launch of higher-dose, discounted Zepbound vials, indicating a strategic move from the company to capture market share and address pricing pressures.
Technology
The technology sector saw significant movements influenced by corporate earnings. NVIDIA, the poster child for the AI movement, reported better-than-expected earnings, which was certainly a positive long term, showing continued demand for chips and ongoing progression within AI. However, the stock still fell 8.5% amid broader concerns about economic slowdown and trade wars. Investors were cautious about the potential impact of President Trump's proposed tariffs on imports of semiconductors (amongst other items), which could adversely affect technology companies reliant on global supply chains.
Despite these setbacks, some technology companies showed resilience. For instance, Apple saw a modest increase alongside Microsoft, evidence of stock-by-stock success during a challenging week.
Emerging markets
Emerging markets overall faced trade tensions and a strengthening U.S. dollar. The proposed U.S. tariffs have raised concerns about reduced demand for exports from emerging economies. Additionally, a stronger dollar makes debt servicing more expensive for countries with dollar-denominated debt, adding to the financial pressures on these markets. That said, China provided some reprieve; gaining strength following government stimulus, which led to optimism across consumer products. This also assisted technology names, in addition to a meeting between President Xi and the country’s tech leaders in a very visible vote of confidence for the country’s ‘national champions’, such as Alibaba and Tencent.
Whilst only the headlines, hopefully this evidences, even in just a single week, the intricate dynamics of markets, with each sector responding to a unique set of challenges and opportunities.
We would go as far to say that it’s impossible to attempt to move portfolios to be on the right side of each story week after week or even month by month.
That’s why we maintain that the only real way to navigate market conditions, particularly over shorter periods, is to invest in fundamentally stable businesses that can withstand the ebbs and flows, “know what you own”, maintain diversified portfolios that are positioned at the outset to best meet your objectives, and look through the noise, focusing on the longer-term growth potential ahead.
