Market Update

At Windsor Wealth we keep clients informed with what is happening in the markets and what our take is. Here is our recent letter to clients.

I’m writing to give you a quick insight into the latest market movements. Despite a backdrop of constant uncertainty, markets have moved forward since April — a month when markets fell hard, and headlines screamed even harder. Back then, markets were down around 15%, and the outlook appeared bleak. Tariffs, inflation, political uncertainty, and it felt like things could get worse before they got better.

But as it turned out, the worst didn’t arrive. In fact, we’ve seen a series of US trade deals with Japan, the UK, and the EU, and now there’s pressure mounting on China to reach agreement as well. Tariffs still have an inflationary effect and will create cost pressures, but overall, the outcome so far has been less damaging than expected, and sometimes, that alone is enough to lift markets. 

From the April lows through to the end of June, markets rallied back to all time highs. A big part of that momentum came from anticipation that earnings season would hold up better than feared. Now we’re in the thick of those earnings announcements. Around 80% of companies have beaten expectations. But because markets had already priced in some optimism in June, share prices haven’t responded much to the good news in July. On average, companies that beat earnings expectations are only up around 1%. Meanwhile, companies that disappointed have been sold off heavily. For example, Spotify dropped over 10% after its results this week. Novo Nordisk, one of the market favourites of the past year, fell more than 20% in a day. 

So this is the current state of play,  markets have moved forward strongly not because everything has gone perfectly, but because many things turned out to be less bad than expected. That’s often enough for markets to rise. And when markets run this far, this fast, in a still uncertain environment, there’s better than a half chance they take a breather. But there’s also every possibility we see another leg or two higher. 

One of my favourite reminders in moments like this comes from an old Fidelity study. They looked at the best performing group of investors across their platform, and found that the top performers were people who had passed away. Why? Obviously, they weren’t reading headlines. Or checking prices. They were, quite literally, doing nothing. 

It’s a good reminder with investing, as in life, things are usually not as bad as they feel in the moment, but they’re also rarely as good as they seem when everything’s going up. Holding that balance in your emotions and your expectations is key.