Update Equities: Mixed returns
Over the past week, global equity markets posted mixed performances, reflecting persistent macroeconomic uncertainty and geopolitical risks. The MSCI World AC Index gained, supported by strength in Europe and the US, while Japan sharply underperformed, contrasting with the broader positive trend. Emerging markets advanced modestly, maintaining a constructive tone despite recent volatility.
In the US, equities rose modestly, underpinned by inflation data broadly in line with expectations and resilient consumer spending, even as concerns linger over a government shutdown and elevated valuations. European markets outperformed, buoyed by signs of stabilizing inflation, which eased fears of further tightening by the European Central Bank and bolstered risk appetite. Conversely, Japanese equities retreated, pressured by weaker bond demand and ex-dividend effects.
Sector trends within the MSCI World Index highlighted a rotation toward defensive stocks and growth-oriented industries. Healthcare led the pack with a robust gain, followed by utilities. Initially pressured by tariff concerns, healthcare rebounded sharply thanks to exemptions for US-based production and strategic agreements, such as the Trump-Pfizer deal. Additionally, major pharmaceutical companies, such as Eli Lilly, Merck and Bristol Myers, contributed to the sector’s strong performance, benefiting from favourable pricing trends and positive clinical trial results. The materials sector also delivered solid gains over the week.
The information technology sector maintained its upward momentum, rising for the week and by an impressive 9.7% over the past month. It is largely fuelled by investor optimism surrounding advancements in artificial intelligence (AI) and digital infrastructure. The industrials and financials sectors saw steady gains, supported by strong manufacturing data and stable interest rate expectations. In contrast, the energy and telecommunications sectors underperformed, as oil prices slipped on speculation of increased OPEC+ production.
On the corporate front, Nike (athletic apparel) is showing signs of recovery, with its renewed focus on core sports categories, such as running and basketball, which helped to stabilize performance after a period of weakness. UCB (pharmaceuticals) attracted investor interest following positive updates from its neurology pipeline, lifting confidence in its long-term outlook. In technology, CoreWeave surged after securing a major contract with Meta to supply computing power, underscoring the growing demand for AI infrastructure. Electronic Arts (video games) also gained on reports of a potential landmark buyout deal, which could rank among the largest private-equity transactions ever.