Speaking on a webinar just hours before Donald Trump’s planned tariff sweep, dubbed by the US President “Liberation Day”, Global X’s senior product and investment strategist, Marc Jocum, noted that market strategists have had their hands full navigating the shifting landscape.
“It’s a very interesting time to be a market strategist,” Jocum said. “We’re living almost this political narrative that’s dictating share market price action almost intraday.”
With companies increasingly citing trade policies as a key risk to cost structures and consumer demand, markets remain on edge amid growing geopolitical uncertainty.
“So far this year we have seen some of the US equity indices posting declines. And I think at the start of the year, there was a lot of conviction around US exceptionalism, which we still hold as a key view within our firm, but I think that there was almost too much bullishness within the US,” Jocum said.
Reflecting on earlier forecasts which predicted the S&P 500 would hit 7,000 by the end of the year, Jocum said “markets are now moving very, very quickly”, with some crossing into correction territory.
While the local market has been “a little more defensive”, Jocum acknowledged it hasn’t escaped the impact, reporting YTD losses of around 4 per cent as of Tuesday.
On Monday alone, the S&P/ASX 200 closed 1.7 per cent lower, shedding some $41.6 billion of its market value as investors braced for Liberation Day.
Turning back to the US, Jocum said that small caps too haven’t been immune to the sell off.
“They’re down about 10 per cent, the S&P 500 is down about 6 or 7 per cent, our Aussie market has been a little bit more defensive, but even then, we’re still down a few per cent. And really it’s been about the European market leading the way,” he noted.
An interesting trend observed by Jocum is the growth of sector divergence as the market has broadened.
Namely, while the once-dominant tech giants have been losing ground, energy and healthcare stocks have emerged as new market darlings.
“Whether you’re looking at the likes of Tesla, down 40 per cent and the broader Magnificent Seven, really, there’s only one stock that’s still in positive territory, which is Meta,” said Jocum.
“But interestingly, you've got companies in energy and healthcare that have really been leading the charge,” he added, citing CVS Pharmacies with 50 per cent growth to date, and the likes of Exxon in the energy sector.
Sectors traditionally viewed as defensive are particularly well-positioned to provide resilience, Jocum said, adding that even though US markets are down as a whole, “there are still some pockets that investors can get exposure to that have actually been performing quite well”.
Global X ultimately still believes in US exceptionalism as an enduring theme.
Also speaking on the webinar, Jocum’s colleague and senior investment strategist, Billy Leung, highlighted that Trump’s policy agenda remains firmly pro-growth and pro-business, with a continued focus on onshoring and deregulation. The only thing that has changed, he said, is the sequencing of his policies.
“If we still do believe that Trump is adhering to his current goals of pro regulations, onshoring, pro growth, this should still be positive in terms of our view of US exceptionalism,” Leung explained.
As such, while he expects investors to continue to “seek clarity” in the near-term, which could see markets dip in the vicinity of the “mid-teens”, Leung expects the US to bounce back.
Highlighting the sustained trend of US economic growth outpacing the G7 average, Leung said: “I think we should still be overweight, or at least exposed to the US”.
Similarly, Jocum said the broader US narrative is “still very much intact”, particularly for Australian investors looking to escape a home bias.
“These are some of the best capitalist machines, arguably, we’ve ever seen in our time,” he said.
“Australian investors, who tend to have a domestic bias, really want that exposure, because you’re not going to see too much earnings happening within the ASX 200 more broadly. They do want to get that double-digit earnings growth within the broader US market.
“We just might have to endure just a little bit of short-term market movements,” he conceded.
