Investor sentiment continued rotating toward Europe and defensive sectors as US policy uncertainty weighed on technology-heavy equity markets.
24 February to 28 February 2025
The balance of political policy uncertainty when comparing the US with Europe has seen a notable shift since the 2024 US Presidential election. Sentiment within the US is showing early signs of turn turning down as government induced policy uncertainty weighs on consumers and corporates. The Conference Board this week reported its biggest monthly decline in US consumer confidence since 2021.
In contrast, the results of the German election at the start of the week proved sufficient to fashion a stable government (albeit through coalition) that that can respond to US tariff threats. Increasing defence spending is also on the cards, representing as much as 1% German GDP.
Equity markets have reflected such changes over recent weeks with the US, in aggregate, underperforming.
