Asset Class

Equities Research Hub

Global equity markets are currently navigating a 'risk-off' environment characterized by a significant rotation from technology to defensive sectors. This shift is highlighted by a sharp 5.9% decline in the US Momentum factor and a correction in US tech stocks, even as companies like Alphabet continue massive investments in AI infrastructure. Earnings reports for 4Q25 reveal a mixed landscape; while consumer names like Yum! Brands show resilience, sector-specific pressures such as multiple compression for Ferrari and disappointing guidance from Information Services firm Gartner have led to price target downward revisions. In Europe, pharmaceutical giants GSK and Novartis have issued guidance trailing consensus, further contributing to a cautious outlook in the region. Regional equity sentiment is also being shaped by political developments, most notably in Japan, where a projected LDP victory is expected to support 'Abenomics'-style stimulus alongside Bank of Japan rate hikes totaling 75bp. Additionally, the cooling of Brent crude prices toward $68/b amid diplomatic progress in the Middle East and large-scale renewable energy investments, such as Saudi Arabia's $2bn solar agreement with Turkey, are influencing broader market dynamics. Despite localized volatility and currency fluctuations, global PMIs suggest an underlying 2.8% annualized rise in GDP, providing a macro cushion for diversified equity portfolios.

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