The Football World Cup, the heatwave in Europe, the resurgence of the Iran-US conflict, massive wildfires in France and Spain…
News stories have come thick and fast this July at an unusual pace. News that is, sadly, often dramatic and anxiety-inducing. Meanwhile, the financial world was also focused on corporate earnings reports, which were outstanding: by the end of July, 86% of US companies (that had reported) exceeded expectations. 2026 is set to be an exceptional year for profit growth.
This partly explains why volatility in the major indices remains contained despite the anxiety-inducing news. However, it will not have escaped investors’ notice that the performance of individual shares tells a very different story. The stability of the indices, which are holding up remarkably well whilst some blue-chip stocks are experiencing difficult trading sessions, can be seen as a sign of a ‘healthy rotation’, allowing new stocks or themes to emerge.
Without seeking to determine whether this individual volatility is a good or bad omen, one thing is certain: markets that are less dependent on macroeconomy and more sensitive to individual performance should help stock-pickers to deliver better results in the long run. While such periods may prove challenging to navigate in the short run given the highly concentrated nature of some markets, they also tend to be beneficial over the long run to more diversified portfolios.
We are developing these topics in our newsletter
