Markets experienced a volatile period as investors reacted to geopolitical uncertainty, shifting sector leadership, and early earnings results. While risk sentiment wavered mid-week, improving economic data and selective earnings strength helped stabilise markets toward the end of the period. With key earnings and global developments still ahead, this update outlines the main drivers investors should be watching — as discussed by Financial Adviser Tyson Roberts.
Global markets experienced a turbulent week as investors juggled geopolitical uncertainty, shifting sector dynamics and the early stages of Q4 earnings season.
The week began with a pronounced risk-off mood. U.S. equities stumbled mid-week with the S&P 500 falling more than 1% and the NASDAQ shedding 1.5%, while precious metals surged to record highs. Gold and silver both hit new peaks, with silver gaining as much as 6% in a single session. Copper and tin joined the rally, underscoring investor appetite for hard assets amid uncertainty.
A notable rotation theme emerged throughout the week. While the Mag 7 tech giants mostly declined the Russell 2000 small-cap index outperformed the broader market for what became ten consecutive sessions by week's end. This breadth was evident in the underlying data: despite headline index weakness, over 300 individual S&P 500 constituents were actually trading higher, suggesting a healthy rebalancing away from concentration risk.
Geopolitical headlines dominated sentiment. President Trump's escalating rhetoric around Greenland, including threats of 10% tariffs on European nations opposing his territorial ambitions, rattled markets heading into the weekend. The situation introduced discussion of Europe's anti-coercion instruments as a potential retaliatory measure, though Germany's Chancellor Merz urged a more measured approach than France's Macron appeared to favour.
By Friday, some calm had returned. Trump's apparent softening on immediate military action against Iran helped equities bounce back, with the NASDAQ recovering 0.8% and the S&P gaining 0.7%. Oil prices, which had been elevated on Middle East concerns, tumbled sharply -Brent crude fell 4.5% to $63.50 per barrel while WTI dropped below $60.
Economic data painted a mixed but generally constructive picture. U.S. jobless claims fell to 205,000 on a four-week moving average, the lowest reading in two years, reinforcing the narrative of labour market resilience despite subdued hiring. UK GDP surprised to the upside with a 0.3% monthly gain in November, while Germany confirmed its first positive annual growth in two years at 0.2% for 2025.
China's data release showed the country achieved its 5% growth target, though the composition remained concerning. Net exports contributed roughly a third of growth, with the trade surplus reaching $1.2 trillion. Retail sales grew a tepid 0.9% year-on-year, highlighting the persistent weakness in domestic consumption.
The week also brought early Q4 earnings results, with major banks leading the way. While headline numbers from JPMorgan Chase, Bank of America and Goldman Sachs were generally solid—Goldman posting a 12% profit increase—share price reactions were muted or negative as investors scrutinised forward guidance and expense outlooks. TSMC provided a boost to tech sentiment with an 8% earnings beat and bullish capex outlook.
Looking ahead, all eyes turn to Davos where Trump is scheduled to speak, along with pending Supreme Court decisions on tariffs. With approximately 7% of S&P 500 companies having reported and the bulk of mega-cap tech earnings still to come, markets face a pivotal period where strong execution will be needed to justify elevated valuations while it remains to be seen if geopolitics will challenge or support sentiment.
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Markets ended February navigating a complex mix of fading tariff uncertainty, continued technology sector volatility, a mixed Australian earnings season, and a sharp escalation in Middle East tensions that has pushed energy prices and geopolitical risk back into focus. While resilience remains, investors are now balancing sticky inflation, potential rate hikes, and rising global instability as key drivers for the weeks ahead.
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